BPB's $48.50 offer for National, launched in February, was trumped yesterday by Delcor, a subsidiary of Golden Eagle, a company controlled by former National Gypsum chairman Dick Spangler.
Jean-Pierre Cuny, BPB's chief executive, said it would not be in the best interests of shareholders to attempt to match Delcor's $54 bid, which valued National at $1.2bn.
"We said all along that we would not buy National at any price, but obviously we are disappointed. The US is the world's largest market for plasterboard and we cannot ignore it," he said.
The reaction of the stock market reflected concerns about National's possible exposure to asbestosis claims. Observers also warned that the acquisition was badly timed, within two years of the peak of the US building cycle.
A trust created to deal with $700m of outstanding asbestosis claims dating from the 1970s has been seeking more funds from National. In March BPB said that National had settled litigation by agreeing to pay a further $125m into the trust, but the market remained sceptical.
BPB has a reputation for being well-managed, soundly financed and well- placed with a 50 per cent share of the European market for plasterboard and a foothold in the giant North American market through its Canadian subsidiary Westroc.
The company survived a vicious price war in the early part of the decade as Knauf of Germany, Lafarge Coppee of France and BPB fought for European dominance, and shareholders were beginning to enjoy the fruits of a cessation of hostilities. Having bottomed out at £38m in 1992, profits of £205m by next year were being forecast by analysts.
Mr Cuny said yesterday that the search for acquisitions would continue.