(Bloomberg) -- Cie. de Saint-Gobain of France offered to buy Australia’s CSR Ltd. for A$4.3 billion ($2.8 billion) as the building industry consolidates amid a shift to more climate-friendly materials.

The offer price of A$9 a share represents a 34% premium to CSR’s Tuesday closing price. The transaction would rank as the biggest takeover by a French company in 2024 and the second-largest transaction in Australia so far this year, according to data compiled by Bloomberg.

Saint-Gobain’s announcement confirmed a Bloomberg News report earlier Wednesday that the companies were in talks. In a separate statement, CSR confirmed the offer and said its board had unanimously decided to pursue a transaction. 

Chief Executive Officer Benoit Bazin has been reshaping Saint-Gobain’s portfolio and leading a push to expand in key regions such as North America, part of efforts to focus on more environmentally-friendly materials. 

Saint-Gobain, founded during the reign of King Louis XIV and known for having made the mirrors of the Palace of Versailles, is one of the world’s biggest construction suppliers. It manufactures materials such as plasterboard used for partitions, soundproofing materials and glass for skyscrapers.

The French company has already lined up financing for the deal, people with knowledge of the matter said. The company had about €6.1 billion ($6.6 billion) of cash and equivalents at the end of December, according to data compiled by Bloomberg.

An acquisition of CSR could help Saint-Gobain diversify and boost growth in residential and commercial building products in Australia and New Zealand. 

“The strategic fit in terms of product exposure would make a great deal of sense, while the acquisition would be ‘bite-size’ given Saint-Gobain’s strong balance sheet,” Stifel analyst Tobias Woerner said in a note. “It would be a nice geographic expansion combined with its Asian exposure. It would also increase its focus around its ‘new’ strategy of light, sustainable construction.”

CSR was founded in 1855 and its brands include Gyprock plasterboard and Bradford Insulation, according to its website. It has 2,600 employees in Australia and New Zealand.

CSR’s shares surged as much as 18% in Sydney to A$8.02, the highest since June 2008, after Bloomberg News reported on Saint-Gobain’s interest earlier Wednesday, prompting a trading halt. 

Construction companies have been under scrutiny recently as higher borrowing costs weigh on real estate markets in Europe and the US. A tight housing market in Sydney has focused attention on the construction and building materials businesses in Australia.

Saint-Gobain, meanwhile, has been overhauling itself as rival Holcim Ltd. of Switzerland also pursues a makeover, expanding with a series of acquisitions and plans announced last month to separate its fast-growing North American business to pave the way for a stock listing.

In recent years, Saint-Gobain has acquired companies including Canadian siding producer Kaycan Ltd. and U.S. specialty construction chemicals maker GCP Applied Technologies Inc., while divesting glass bottle maker Verallia SA.

Saint-Gobain’s shares have climbed about 29% in the past year, lifting the French company’s market value to almost €35 billion ($38 billion). The stock declined as much as 1.8% on Wednesday’s announcement before paring losses.

Saint-Gobain employs 168,000 staff and has operations in 75 countries, according to its website. In addition to construction materials, the firm says it makes windows and parts for the automotive and wider transport sector, as well as products used in other industries such as health care.

CSR’s board has unanimously resolved to pursue the offer, and Saint-Gobain is completing final due diligence, the French company said Wednesday. No transaction is assured at this stage.

“The deal is absolutely consistent with Saint-Gobain’s long-term strategy, namely to be the worldwide leader in light and sustainable construction,” Ross Harvey, an analyst at Davy, told Bloomberg. “We think that Saint-Gobain’s track record on M&A and margin improvement in recent years has been positive and worthy of support.”

(Updates with CSR statement in third paragraph.)

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