Boral has today announced that it has entered an agreement with subsidiary of Westlake Chemical to sell its North American building products business for $US2.15 billion ($2.86 billion).
Boral’s North American business includes roofing, stone, light building products and windows businesses.
Westlake Chemical is an international manufacturer and supplier of petrochemicals, polymers and fabricated building products. Headquartered in Houston, Westlake provides solutions from healthcare products to automotive and consumer goods to building and construction products.
Boral has owned and operated building products businesses in the US for more than 40 years. The decision to sell the North American business, as Boral Chief Executive Officer Zlatko Todorcevski noted, was to generate surplus capital “to unlock significant value for Boral’s shareholders.”
“This agreement follows an extensive market testing process in which we received strong interest from a broad range of high calibre potential buyers,” Todorcevski said.
“The sale will generate further significant surplus capital once the transaction closes. In accordance with Boral’s financial framework, after optimising Boral’s net debt position and allowing for reinvestment needs, we expect a significant surplus to be available for distribution to Boral shareholders,” he added.
In April last year, Boral had announced it would preserve cash supply by slowing production abroad to align with the lower activity in a COVID-19 market update. This included a slow down and closure of some of the company’s facilities in North America and Asia.
Following the sale of the North American business, Boral said its net debt target would fall from $1.5 billion to $1.3 billion.
Earlier in May, Boral rejected an off market offer from Seven Group to acquire 100 percent of Boral for $6.5 per share, with a committee of Boral directors deeming the offer as “opportunistic.”
The transaction is subject to customary conditions and is expected to complete in the first half of 2022.
The profit on sale of business is expected to be disclosed as part of Boral’s full year 2021 final year results on 24 August 2021.
Boral is continuing to explore value creation opportunities from its fly ash business, through either a potential joint venture, a strategic alliance, divestment to third party or continued ownership of the business.