BGC stops clock on sale of Midland Brick unit

BGC’s bricks business is estimated to be worth somewhere between $150m and $300m.

Perth-based building materials group BGC is understood to have pushed back the sale of its bricks unit until next year, say sources.

The majority of the BGC business was sold in December to Cement Australia for up to $800m. The group fended off competition from Boral to buy the unit.

The bricks business is estimated to be worth somewhere between $150m and $300m, and the understanding is that BGC has opted to take more time to divest that part of its operation.

While it is unclear who the buyer will be, one group that will not be lining up in the competition is Brickworks (now part of Soul Patts), which has previously been involved in legal action with BGC, its major West Australian competitor.

Working on the deal is likely to be Macquarie Capital, which sold the unit last time around.

BGC’s brick business is called Midland Brick, which the group describes as one of Western Australia’s most recognised and respected brands, selling bricks, concrete blocks, clay and pavers.

Other products include retaining wall units, roof tiles and stone.

BGC purchased Midland Brick from a consortium in 2020 that had earlier bought the business from Boral.

It was expected to be worth about $50m to $70m.

BGC had been put on and off the market by the family of the late Len Buckeridge, who started the business in 2018.

Its West Australian quarries and a cement terminal that were offloaded to Cement Australia were considered the jewels in the crown.

The sale was to complete by December and gives Cement Australia a Western Australia presence.

In May, the Australian Competition & Consumer Commission said Adbri had been added to the deal to address preliminary concerns by the competition watchdog, and would buy BGC Quarries, BGC Asphalt and six of BGC Concrete’s ready-mix concrete sites along with other concrete assets.

The competition watchdog’s investigation was focused on the extent to which having two suppliers of cement with vertical relationships to ready-mix concrete suppliers in Perth would impact competition and supply.

Those BGC assets that sold last year to Cement Australia were generating between $60m and $80m of annual earnings before interest, tax, depreciation and amortisation.

Cement Australia, which was advised by UBS, is a joint venture between European companies Heidelberg Materials Australia and Holcim.

It is the second-largest player in the Australian cement industry behind the CRH-owned Adbri.

Sources said it paid a price in the high $700m range, equating to a multiple of about 10 times ­EBITDA.

BGC said in a statement at the time that it retained a significant business of about 1000 employees, centred around the growing residential construction industry.

This includes Midland Brick, the BGC Building Products division and the BGC Housing Group.

Analysts say building materials are attractive because of the lack of housing supply.