CSR board sweet on $4.3bn bid from French giant Saint-Gobain

French building giant Saint-Gobain has sealed a $4.3bn takeover offer for CSR that includes accepting liability for the Australian company’s historic asbestos claims.

CSR, established in 1855 as a sugar refining business, has a portfolio of building products including Monier Roofing, PGH Bricks and Gyprock.

French building giant Saint-Gobain has sealed a $4.32bn takeover offer for CSR that includes accepting liability for the Australian company’s asbestos claims.

CSR’s board said late Monday it had unanimously recommended shareholders accept the $9 per share offer from Saint-Gobain as “providing attractive value and certainty”.

The price represents a premium of 33 per cent to CSR’s closing share price on February 20. 

CSR, established in 1855 as a sugar refining business, has a portfolio of building products including Monier Roofing, PGH Bricks and Gyprock.

Its chief executive Julie Coates said Saint-Gobain had a “strong strategic and cultural alignment” with CSR. 

“The transaction also offers opportunities for our other stakeholders, including the CSR team and customers,” said Ms Coates. “Our focus remains on delivering outstanding building solutions for our customers and the building and construction markets in which we operate.”

Ms Coates said Saint-Gobain was “buying all of the company” including claims for asbestos illnesses linked to the mining of raw asbestos fibre by one of its subsidiaries decades ago.

CSR’s involvement in asbestos mining ceased in 1966 and it stopped the manufacture of products containing asbestos in 1977. “We have been responsibly paying claims for decades and nothing will change,” said Ms Coates. “The company will continue to pay all valid claims.”

CSR’s asbestos provision stood at $187.1m in September last year.

Ms Coates said Saint-Gobain had indicated it could review CSR’s joint venture participation in the Tomago aluminium smelter but was committed to working with other shareholders to find an adequate power supply for the business.

CSR managing director and CEO Julie Coates.

Tomago Aluminium will begin formal talks this year over a new electricity contract after a process to identify potential renewable energy providers attracted massive interest from energy majors and would-be wind and solar power generators.

CSR chairman John Gillam said the offer “provides attractive value and certainty” for CSR shareholders.

“The board has very carefully considered the terms of the proposal and is unanimous in its recommendation to shareholders,” said Mr Gillam. “The final proposal follows an initial offer in early January this year and a period of negotiation.” 

Mr Gillam said he did not expect any opposition to the deal from the Foreign Investment Review Board. 

“It will be up to Saint-Gobain to get the necessary approvals and they have indicted they want to get on with it,” said Mr Gillam. 

Saint-Gobain considered an acquisition of Boral in the past, but walked away. CSR generates about half of its building products earnings from Gyprock plasterboard and the remainder from bricks, insulation and the concrete product Hebel. 

There has been a flurry of takeover action in the Australian building materials sector recently, with Seven Group’s $2bn proportional takeover of Boral launched last week, and global player CRH looking to take AdBri private along with major shareholder Barro Group.

Saint-Gobain’s main interest in CSR is the plasterboard operation, with speculation it could sell the bricks operation. 

CSR said late last year it was investing in factory upgrades and more trucks in an effort to meet surging demand for housing.

Ms Coates said housing demand remained strong thanks to immigration, low unemployment and government stimulus, with a building backlog set to persist into this year.

She said some builders were still struggling to complete projects due to labour and material shortages, with the time needed to complete a house blowing out from 10 months to a year.

“The biggest challenge for builders is access to labour.”