Boral has entered into a binding agreement to acquire US company Headwaters Incorporated for US$24.25 per share in cash, equating to a price of US$2.6 billion or A$3.5bn.
The deal has been unanimously approved by the board of Headwaters.
Boral describes the transaction as “strategically compelling” and says it “transforms Boral, better positioning the Group to deliver more sustainable growth and above cost of capital returns through market cycles.”
In its press release, Boral said that the two companies are highly complementary US businesses, with combined revenue of over US$1.8 billion, more than doubling Boral USA.
Boral’s purchase will deliver significant scale to its US fly ash business, which will play favourably into the infrastructure spend underway in the USA, and accelerated development of Boral’s light building products platform.
The two companies put cost saving synergies at US$100 million per annum within four years of closing the deal.
Mike Kane, Boral’s CEO & Managing Director, said: “Headwaters has a portfolio of strong businesses with recognised brands, quality products, diverse end market exposures and solid earnings performance.
“The businesses of Headwaters are highly complementary with Boral’s existing US operations – in fly ash, roofing, stone and light building products. And it’s this strong alignment that means we can deliver substantial value through synergies – ramping up to approximately US$100 million per annum of synergies within four years of closing.
“It’s the synergy opportunities that help make this a highly compelling acquisition, and I am confident that we have the right team in place to bring together the two portfolios, drive integration and deliver strong value creation for Boral’s shareholders.
“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 three very strong divisions.”
Kirk A. Benson, Chairman & CEO of Headwaters, added: “We are looking forward to working with Boral to ensure a smooth transition for our stakeholders, as we create one of the leading manufacturers and distributors of building products and construction materials for infrastructure, new residential, repair and remodel, commercial and institutional construction.”