March 10 (Reuters) - U.S. construction and building materials supplier GCP Applied Technologies Inc is nearing a deal over the composition of its board with activist hedge fund Starboard Value LP, people familiar with the matter said on Sunday.
The agreement would come after Starboard amassed a 4.6 percent stake in GCP and put forward five nominees to stand for election to the Cambridge, Massachusetts-based company's nine-member board of directors.
GCP has agreed to appoint at least two of Starboard's nominees to its board, the sources said. If the negotiations are concluded successfully, the agreement could be announced this week, the sources added.
GCP has said it is exploring strategic alternatives, a move that Starboard, which would like to see the company sell itself, supports, the sources said.
The sources asked not to be identified because the matter is confidential. GCP and Starboard declined to comment.
GCP, which was spun off W.R. Grace & Co in 2016, is a provider of specialty construction chemicals, focusing on concrete admixtures and cement additives, as well as specialty building materials that protect structures from water, air and fire damage. It has a market capitalization of $2.1 billion.
In July 2017, GCP sold its Darex packaging business to Germany's Henkel AG & Co KgaA for about $1.1 billion. GCP's shares are now valued almost as much as they were two years ago, as the company has faced intensifying competition from larger rivals, including RPM International Inc, BASF SE and Sika AG.
GCP told its shareholders in an open letter last month it had taken "decisive steps" to make its business more efficient, and announced a restructuring plan focused on its supply chain strategy, including its manufacturing, purchasing, logistics, and warehousing operations.
Starboard is one of the most prominent and prolific activist hedge funds. It is currently seeking to break up drug maker Bristol-Myers Squibb Co's $74 billion deal to buy Celgene Corp. It is also pushing for changes at discount retailer Dollar Tree Inc, and has put forward nominees to challenge the board of healthcare plan and pharmacy benefits manager Magellan Health Inc. (Reporting by Greg Roumeliotis in New York; Editing by Gopakumar Warrier)