Adbri could be the latest to fall to overseas takeover

Veteran building products supplier Adbri could be the latest Australian manufacturer to fall to overseas control following an offer from a consortium of global building supplies group CRH plc and local premixed concrete supplier Barro Group.

The partners have submitted a non-binding offer pitched at 9x EBITDA profit and a 41 percent premium to the last closing price – valuing cement and lime manufacturer Adbri at $2.1 billion.

Barro Group already owns or speaks for 47.3 percent of the issued capital of Adbri, with CRH to buy the remaining shares and take control of the Adelaide-based national business for $1.1 billion. Adbri’s Chairman Raymond Barro is a member of the Barro family.

Adbri, as Adelaide Brighton Cement, pioneered cement manufacturing in Australia in 1882 with Australia’s first Portland cement plant at suburban Brighton in Adelaide, and now operates more than 200 cement plants and facilities across Australia.

The company trades under 16 well known brands including Cockburn Cement in Western Australia and HY-TEC on the east coast, and manufactures bricks and besser blocks as well as manufacturing and exporting lime for the aluminium industry.

Adbri is currently combining two cement plants into a new low cost, lower emissions plant at Kwinana in Western Australia which will significantly increase its competitiveness in that market.

Most recently Adbri has been leading the way in decarbonising its operations, linking with industrial technology company Calix to build a commercial-scale plant in NSW’s Southern Highlands, able to capture 100,000 tonnes per annum in emissions from lime manufacture, supported by a $30 million grant from the federal government.

However all this seems likely to fall under foreign control – further diminishing Australian ownership and control of basic manufacturing operations.

An independent group of Adbri directors has assessed the bid and granted CRH exclusive access to conduct due diligence, with the intention to unanimously recommend the takeover to investors.

The bid is subject to Foreign Investment Review Board approval, however given recent history, the FIRB will wave through the takeover should it be satisfied it will not lead to an increased concentration of ownership in the sector.

The Chief Executive of CRH Albert Manifold said Adbri was ‘an attractive business with quality assets’ that would complement its existing Australian businesses, which do not include cement or lime manufacture.

Manifold said: “Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates.

“With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us.

“It is the next logical step for CRH to expand our existing presence in Australia, where we have been operating for 15 years.

“… We look forward to working with the Barro family over the coming years to enhance the long-term performance of the business, leveraging our scale, industry knowledge and technical expertise to improve long-term growth and operating performance and drive value to achieve the true potential of the business.”

The takeover of one of South Australia’s top 10 largest companies is sure not to be welcomed by the South Australian government which is already concerned about merger talks underway between the state’s largest company Santos and energy group Woodside.

In early trading shares in Adbri shares were up 28.41 per cent to $2.92.

Further reading:
Australia’s oldest cement company acts towards net zero
Adbri reviews ballooning cost of Kwinana upgrade
Calix raises funds for Boral and Adbri low-emission industrial plants

Picture: Adbri