Boral buys Headwaters for $1.8 billion

Boral will pay $24.25 per share, 21 per cent more than Headwater's closing price on Friday

Australia’s Boral agreed to buy US building materials company Headwaters for $1.8 billion in cash as it seeks to benefit from increased infrastructure spending promised by President-elect Donald Trump.

Boral will pay $24.25 per share, according to a statement on Monday — 21 per cent more than Headwater’s closing price on Friday. It plans to sell A$2.05 billion ($1.5 billion) of shares at $4.80 each, a 22 per cent discount to the last closing price, to help fund the deal, with the balance coming from existing cash and debt. The Sydney-based company’s largest acquisition will more than double the size of its US operations and boost its fly ash business, which will “play favourably into the infrastructure spend underway” in the US, Boral said in the statement.

Trump has pledged a $1 trillion program to rebuild highways, tunnels, bridges and airports. Headwaters’s businesses are “highly complementary with Boral’s existing US operations — in fly ash, roofing, stone and light building products,” Chief Executive Officer Mike Kane said in the statement. The deal is expected to deliver savings of $100 million a year within four years, he said.

The acquisition will give Boral a US business with an annual revenue of $1.8 billion, according to the statement. Fly ash is used to produce concrete and the business is “forecast to experience strong growth,” the company said.

The deal, which has an enterprise value of $2.6 billion, is expected to be completed mid-2017. Boral is being advised by Citigroup and Macquarie Capital. 
Bloomberg