The near-$2bn Australian listed Adbri has confirmed interest in the $1bn-plus West Australian building materials empire BGC.
Adbri chief executive Nick Miller told investors at the Macquarie Australia Conference that parts of BGC remained of interest to the building materials provider, particularly its downstream assets.
However, an acquisition would be complex, as Adbri navigated competition clearance issues with the Australian Competition and Consumer Commission.
BGC is the Perth-based building materials business of the late Western Australia billionaire Len Buckeridge, now owned by his family and is up for sale through investment bank Macquarie Capital and PwC.
Market analysts believe that Adbri will likely be keen to buy BGC’s concrete plants and quarries, but would be unable to acquire its cement facilities due to objections from the competition watchdog.
Other parties taking a look at the business are believed to be Boral, while some believe that Holcim, Cement Australia and Heidelberg will likely form a consortium to bid for the assets.
Holcim and Heidelberg are Cement Australia’s shareholders.
DataRoom revealed on April 5 that sales plans were ramping up.
A flyer document is currently in the market for BGC promoting the business to buyers.
The process is set to get underway shortly, with interested parties still awaiting information memorandums before lobbing offers.
DataRoom understands that BGC’s Western Australia cement grinding terminal, quarries, concrete and transport businesses account for least half of BGC’s overall value.
Also forming part of BGC is its building construction arm and bricks businesses Midland Brick, a dominant player in Australia’s west.
While some suitors would shy away from those operations, others say that such businesses of scale in the west are rarely on the market and would be seen as a valuable opportunity for certain buyers.
Overall, it is understood that BGC generates $100m of earnings before interest, tax, depreciation and amortisation and $1bn of revenue.
The sale comes amid a period of strong conditions in the construction market in Western Australia, which has seen its economy fuelled by rising commodity prices globally.
Consortiums have been forming to bid for the business, with the company in a situation where it needed to offload BGC in one line to prevent tax leakage.
Some believe that Knauf would be the obvious buyer of the plasterboard operations after buying Boral’s plasterboard business on Australia’s east coast.
Brookfield, Carlyle and Blackstone have all run the ruler over BGC in the past.
The estate of the late Len Buckeridge, who passed away in 2014, was originally worth over $2bn.
The family have since sold off two hotels, the contract mining operation, property development land and apartment projects.
BGC is seen as a complex, eclectic business where operations are interrelated.
Adbri is Australia’s number one lime producer and concrete masonry products supplier and also holds the number two position in the cement and clinker market to the construction sector.
It is the fourth largest concrete and aggregates producer in Australia.
The strong conditions for construction in the past year lifted its annual revenue 8 per cent to $1.57bn and its net profit by 25 per cent to $116.7m.
Mr Miller said while buoyant construction and a healthy infrastructure pipeline would support its Cement, Concrete, Aggregates and Masonry operations, its lime volumes were expected to decrease by about 7 per cent on the previous corresponding period driven by the decrease in Alcoa volumes.
ABC Price at posting:
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BRIDGET CARTER
