Boral is set to sell its 50 per cent stake in the US Gypsum (USG) Boral Joint Venture to Knauf for $1.4 billion, including the plasterboard based businesses in Australia, New Zealand, Asia and the Middle East.
The decision to sell its stake in the joint venture comes after a comprehensive assessment of all options and because of the compelling offer from Knauf.
The sale will produce a profit before tax of $540 million which is 15.1 times normalised earnings before interest, tax, depreciation and amortisation (EBITDA).
This sale takes place during a Boral portfolio review and leadership and board renewal.
A review of the company’s portfolio is underway, which found Boral Australia has strong underpinnings with outstanding assets and positions. The business has identified significant opportunities to deliver strong results, such as making the business more customer focused, nimble and cost efficient.
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Zlatko Todorcevski took over as Boral’s new CEO and Managing Director on 1 July 2020. The company recently appointed a new Chief Finance and Strategy Officer, Tino La Spina, who began on 14 October 2020.
Darren Schulz has also been announced as the new President and CEO for Boral North America.
Boral has also announced it plans to explore third-party interest in it’s North American building products businesses and will asses divestment opportunities.
The company will keep a hold of its fly ash business in North America which it states has been an attractive cash generating business with a leading position, strong returns on capital and a solid customer demand profile.
Todorcevski said the company has been working with Knauf for some time to find the best path forward for the business following Knauf’s acquisition of the Joint Venture partner USG.
“We recognise that it makes sense for Knauf, being the worlds largest plasterboard player, to have 100 per cent ownership of the business,” he said.
“The sale of Boral’s interest in USG Boral to Knauf will be a step to simplifying Boral’s geographic footprint and product portfolio.”
Todorcevski said the company has conducted a very thorough process in recent months to scrutinise and assess all of the businesses in the portfolio.
“Work continues around the assessment and implementation of revenue growth and improvement opportunities for Boral Australia including finalising plans to support a leaner, nimble and more cost-efficient business with greater customer focus,” he said.
“In the US we also see significant upside potential and we are implementing strategies to strengthen performance.”
Todorcevski said it’s also clear others recognise the attractiveness of Boral’s US building products assets and the company will explore interest in those assets to asses if there are value creation opportunities beyond the prospects seen for business improvement outcomes.