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UPDATE 1-Eagle Materials bows to pressure to spilt core businesses

(Adds plan details, share movement)

May 30 (Reuters) - Eagle Materials Inc said on Thursday its board had approved a plan to spin off its heavy materials and light materials businesses into two publicly traded entities, bowing to pressure from hedge fund Sachem Head Capital Management.

The company's shares rose 4 percent in early trading.

Earlier this month, Sachem, which disclosed a 9% stake in Eagle Materials in March, urged the company to separate its cement and wallboard businesses and nominated two candidates to the company's board.

After the split, Eagle's heavy materials business will operate as a cement company, and the light materials business will continue to make gypsum wallboard and recycled paperboard.

Eagle also said it is actively pursuing alternatives for its oil and gas proppants business, after Sachem said the diversion of the company's cash to fund its expansion into oil and gas proppants has resulted in "substantial underperformance" in its stock price.

"We believe that by pursuing the actions announced today the Eagle board is taking significant steps to unlock the companys inherent value," Sachem Managing Partner Scott Ferguson said on Thursday, adding that Sachem is withdrawing its director nominations.

The separation will be by a tax-free spin-off to Eagle shareholders and is expected to be completed in the first half of 2020.

Both the new companies will remain headquartered in Dallas, Texas, Eagle said. (Reporting by Sanjana Shivdas in Bengaluru; Editing by Maju Samuel)