The Boral Limited (ASX: BLD) share price is up 3% after the construction business announced a $1 billion sale.
Borals sells Ash business for $1 billion
It has announced that it has entered into an agreement with Eco Material Technologies to sell its North American Fly Ash business for a total consideration of US$755 million, or $1 billion in Australian dollar terms.
This transaction will complete the company’s portfolio decision and strategic refocus back on its construction materials business in Australia.
Together with the sale of its North American building products business and its stake in Meridian Brick, it will have divested the North American businesses for more than A$4 billion after the finalisation of this transaction.
Boral CEO and Managing Director Zlatko Todorcevski said that the company has unlocked substantial value for Boral shareholders:
“We have undertaken a rigorous and competitive process to determine the best outcome for Boral in relation to the Fly Ash business and we are pleased to announce an agreement to sell the business to Eco Material Technologies.
“This is a significant milestone that supports our strategy to refocus on our construction materials business in Australia.
“As with the case with building products in the US, Boral has owned and operated fly ash businesses in the US for some 40 years. It has been an important part of Boral’s history and we recognise and value the contribution our employees and customers in North America have made to Boral over that time.”
The deal is expected to complete in FY22.
Plans for the money
After allowing for what’s needed for re-investment, Boral said that the net proceeds from the sale will add to surplus capital. The board will decide the most appropriate way to return surplus capital to shareholders at the relevant time.
Thoughts on Boral and the share price
I’m not an expert on Boral, but management seem pleased with the divestments that it has done.
It’s hard to say what the longer-term outlook is for the construction industry, so I’m happy to leave investing in Boral to others (namely Seven Group Holdings Ltd (ASX: SVW)).
