Adbri has BGC empire in its sights

by | May 16, 2022

Adbri chief executive Nick Miller. Picture: Britta Campion. Source: The Australian.

Valued at close to $2 billion, Australian listed Adbri recently confirmed its interest in the West Australian building materials empire BGC, believed to be valued at around $1 billion plus.

Adbri Chief Executive Nick Miller recently spoke with investors at the Macquarie Australia Conference saying that parts of BGC, particularly downstream assets, were of interest to the building materials provider, according to a recent The Australian report.

As a Perth-based building materials business, BGC was founded by the late Western Australia billionaire Len Buckeridge and is currently owned by the family. BGC is now up for sale through investment bank Macquarie Capital and PwC.

It is believed that an acquisition could be tricky because Adbri would have to navigate clearance issues with the Australian Competition and Consumer Commission (ACCC), due to its interest in BGC’s concrete plants and quarries, according to the report.

Boral is another party that may also be considering the sale. Holcim, Cement Australia and Heidelberg are also expected to form a consortium to bid for the assets, particularly considering Holcim and Heidelberg are Cement Australia’s shareholders.

BGC is already promoting the business to buyers via a flyer document, however interested parties are still awaiting information memorandums before lobbing offers.

Western Australia cement grinding terminal, quarries, concrete and transport businesses account for least half of BGC’s overall value, while other parts of the business consist of its building construction arm and bricks businesses Midland Brick, a dominant player in Australia’s west, according to the report.

Industry experts say that businesses of this scale are rarely on the market in the west and would be seen as a valuable opportunity for certain buyers, particularly with BGC generating $100 million of earnings before interest, tax, depreciation and amortisation and $1 billion of revenue, the report outlined.

Knauf is expected to also be an obvious buyer of the plasterboard operations after buying Boral’s plasterboard business on Australia’s east coast. Brookfield, Carlyle and Blackstone have all run the ruler over BGC in the past.

BGC is well known as a complex business, according to the report, where operations are interrelated. Adbri is also well-known as Australia’s number one lime producer and concrete masonry products supplier, holding the number two position in the cement and clinker market to the construction sector.

It is the fourth largest concrete and aggregates producer in Australia, according to the report, with the strong conditions for construction in the past year lifted its annual revenue eight per cent to $1.57 billion and its net profit by 25 per cent to $116.7 million.