Australia's building materials supplier Boral to buy US-based Headwaters for $1.8 bn
21 November 2016
Boral Ltd, Australia's biggest supplier of building materials, yesterday struck a deal to buy Headwaters Inc for $1.8 billion in cash, in order to expand its presence in the US.
Boral has offered to pay $24.25 per share, a 20-per cent premium to Headwaters' closing price on Friday's.
Boral intends to partially finance the deal through a A$450 million ($330 million) institutional placement and a A$1.6 billion accelerated renounceable entitlement offer. The company will also use some debt and existing cash.
The acquisition, which has been approved by the boards of both companies, is expected to be completed in mid 2017.
The merger will create the largest supplier of fly ash in the US, a key ingredient in concrete.
The deal ''increases Boral's exposure to the US building and construction markets, which are experiencing positive momentum,'' Boral said in a statement.
With a market cap of A$4.6 billion, Australian Stock Exchange-listed Boral is Australia's largest building and construction materials supplier and has an existing presence in the North American building and construction materials industry, with strong positions in bricks, concrete and clay roof tiles, manufactured stone and fly ash.
The Sydney-based company has annual revenues of A$4.3 billion has over 12,000 employees working across over 600 operating sites.
The deal comes after US President-elect Donald. Trump said that he would aims to spend $1 trillion in infrastructure development over 10 years by rebuilding highways, bridges, tunnels, airports, schools and hospitals.
Headwater, based in Utah, is a manufacturer of building products for the residential construction, residential remodeling, commercial and institutional construction industries.
The company's portfolio of building products consists of specialty siding, trim board, decking, architectural stone, roofing, windows and block products. Headwaters' Construction Materials segment focuses on the sale of high quality fly ash as a partial replacement for portland cement when making concrete.
''Headwaters has been rigorously assessed and with its highly complementary portfolio of assets, which are strategically aligned with a number of Boral's existing U.S. businesses, this is a highly compelling acquisition for Boral,'' said Boral's chairman, Brian Clark.
Kirk Benson, chairman and CEO of Headwaters, said the tie-up would ''create one of the leading manufacturers and distributors of building products and construction materials for infrastructure, new residential, repair and remodel, commercial and institutional.