Boral have entered into a binding agreement to acquire headwaters Inc. for US$24.25 per share (AU$31.46) in cash, representing an aggregate enterprise value of US$2.6 billion (AU$3.4 billion). While still subject to Headwaters Inc. shareholder approval and regulatory approval, the acquisition is expected to be complete by July 2017.
Being the largest supplier of construction materials to Australia, Boral is hoping to take full advantage of President Donald Trump’s commitment to increased infrastructure spending, by supplying more of the materials that will be needed for construction.
Headwaters Inc. is one of the leading manufacturers of building products and one of the largest marketers of fly ash (FA) in the US. They operate across two core divisions, building products and construction materials. with the construction material division delivering around US$370 million (AU$480 million) in revenue a year. This is a direct result of FA’s strong growth experienced by growing cement consumption in ready-mixed concrete as well as the competitive cost potion of FA relative to cement.
Boral’s chief executive officer and managing director, Mike Kane believes Headwaters Inc are highly complementary with Borals existing US operations through their businesses such as FA roofing, stone and light building products. In a statement to the ASX, Mr. Kane said “The acquisition will be a transformative step, resulting in the company having FA business with greater geographic reach, more diverse product offerings and strong growth prospects.”
Mr Kane continued “While the acquisition of Headwaters significantly transforms Boral USA, It is also highly transformative for Boral as a group. We can now be confident in Boral’s position as a “global building products” and “construction materials” group with strong divisions.”