Boral, Australia’s largest construction materials group, expects to double its size in the US with an offer to buy US rival Headwaters for US$1.8bn.
The Salt Lake City company would be folded into Boral US, which is based in Denver, Colorado. The combined entity would be the largest distributor of fly ash in the States.
Boral, which currently has a market value of US$3.3bn, will finance the purchase with the launch a $1.5bn rights issue, $614m in borrowing and a $331m share placement.
Boral is Australia’s largest construction materials group (ABIS)
It says the deal will create more than $70m in synergies for the two companies.
Mike Kane, Boral’s US-born chief executive, said President-elect Trump’s plans to spend more on US infrastructure had not been a factor in the decision to acquire Headwaters, but would naturally be positive. "That’ll be all gravy if in fact that happens," he said on a conference call with reporters.
Andrew Scott, an analyst with the Royal Bank of Canada, said in a note to clients on today that the price offered was "fair but not cheap".
The purchase has been unanimously recommended by Headwaters’ directors; it is expected to close in mid-2017 if the deal passed America’s regulatory hurdles.