Saint-Gobain makes $4.3bn CSR play, Barrenjoey on ticket

CSR has fielded a buyout proposal, as the Australian building materials industry remains red hot for international buyers. Picture: iStock

The listed building materials industry appears to be in play as a $4.3bn inbound offer lands for CSR from Barrenjoey-advised Saint-Gobain and with fresh suggestions that the $2.6bn Fletcher Building has caught the attention of a buyer.

Trading in CSR shares was halted on Wednesday before the company confirmed it had received an inbound proposal and Saint-Gobain in Europe said it was offering $9 a share in a friendly deal.

Sources believe the likely play for Saint-Gobain would centre of CSR’s plasterboard operation, and it would sell the remaining bricks operation to a party such as Austria’s Weinerberger, which sells bricks in Europe and the US.

Saint-Gobain was said to be exploring a deal with CSR, advised by UBS, about a year ago, and the pair have had a business relationship and product-sharing arrangement for some time.

Some dealmakers had previously suggested that a logical tie-up would be a CSR-Fletcher Building merger, given they are both in the business of manufacturing plasterboard.

The bid comes as multiple well-placed sources said on Wednesday that at least one inbound offer – thought to be from private equity – had been made for the Australian business of Fletcher Building, while another source said there had been a proposal to buy the company as a whole.

When contacted by DataRoom, Fletcher Building said it had not received any approaches.

A source said the buyout proposal, which may have been made to Fletcher Building’s investment banking adviser, was from at least one international industry player and had been made recently.

It is understood that neither CRH, Holicm nor Hanson was the suitor.

In terms of private equity firms that could have made an opportunistic play include Oaktree Capital Management, Platinum Equity, Allegro Funds, CVC or Anchorage Capital Partners.

Sources say that while interest is probably in the Australia and New Zealand building materials, they have played down the likelihood of a sale of the business to an offshore group or a wider break-up, with parties unlikely to come forward with a compelling offer.

There are suggestions that Barrenjoey is close to at least one suitor.

Fletcher Building has confirmed that it is selling Tradelink and, as reported by DataRoom this week, has approached investment banks to advise on the sale of the Australian-based unit.

In terms of Fletcher Building’s overall defence adviser, Goldman Sachs is known to be close to the company.

Fletcher Building entered Australia through the acquisitions of Amatek for $530m in 2005 and the acquisition of Crane Group in 2010 for $740m.

Among its attractive Australia business units are insulation, Laminex laminates, while its Stramit steel products business is considered a solid performer.

Iplex, currently at the centre of a dispute surrounding its pipe products in Western Australia, would be considered a difficult prospect for a buyer.

Last year, sources said Brookfield had considered Fletcher Building as a takeover target, holding meetings about the business in New Zealand.

The speculation around CSR and Fletcher Building come after Seven Group this week launched a proportional takeover for the nation’s largest building materials provider, Boral Group, valuing the 28.4 per cent interest that it does not already own at $2bn, while global industry player CRH bid for Adbri in December, offering $2.1bn.

A building material industry expert said international companies could see that interest rates had peaked in Australia and that there was a lot of value in land (groups like CSR often carry large land banks), and there was large immigration into Australia.

One source observed that in recent times CSR had been buying back shares and making limited capital investment, consolidating management to curb costs, which made the business attractive to a suitor.

DataRoom reported in 2020 that Saint-Gobain was looking to buy Knauf’s Australian plasterboard assets and had been tipped as a potential buyer of Boral’s $3.5bn US operations.

The Knauf assets (believed to be worth about $400m) were purchased by Etex.

At that time, Saint-Gobain operated in 67 countries. It produces a variety of construction, high-performance and other materials with annual revenue of about €10.9bn ($18bn).

Its construction products division consists of Gypsum, which manufactures drywall, also known as plasterboard; Insulation, which manufactures thermal fibreglass and insulation; Exterior Products, which manufactures roofing and interior and exterior products; and Pipes and Mortars.

Brands include Saint-Gobain Glass, Saint-Gobain Performance Plastics, Weber, British Gypsum, Glass solutions, Gyproc, Artex, Isover, CTD, Jewson, Ecophon, Pasquill and PAM.

The publicly traded €35bn company has embarked on several acquisitions in the past, including Britain’s BPB, which was the world’s largest plasterboard manufacturer, for $US6.7bn in 2005.

It already operates in Australia and has a strong presence in emerging markets such as India and the Middle East.