Investment bank Macquarie is thought to be working on two equity raisings to be announced this week, throwing the spotlight on James Hardie and its acquisition strategy.
While it’s unclear what companies could be about to tap the market, an obvious contender is Tabcorp, but it has been close to UBS, while Nufarm’s debt level improved in its results last week and Lendlease has announced a buyback, placing a raising off the agenda.
But some in the market believe one left field candidate could be the $23.6bn James Hardie, with talk that a major acquisition could be within the sights of the building materials company. Its share price has rallied since its half-year result last week.
James Hardie met its half year earnings guidance and reaffirmed its previous 2025 financial earnings guidance towards the bottom end of its earlier range, saying it would be at least $US635m ($983m), after earlier saying it would be between $US630m and $US700m.
Given that it is in a net cash position, the Australian-listed James Hardie would be in a position to borrow about $US2bn, and a raise on top of that would then indicate a deal of significant scale was looming.
James Hardie has not embarked on corporate activity for years, so it is hard to know what bank it is close to. When it purchased gypsum boards company Fermacell in Europe in 2017 for €516.4m under former boss Louis Gries, it used HSBC.
Recently it has been fronting existing investors in Australia rather than courting new funds, which some suggest could indicate it is staying close to shareholders ahead of asking them for more equity.
In its line of sight is likely to be products that help the company sell more fibre cement, so this could be in the area of trim for housing or manufactured stone.
With the US being a major market for the group, one possibility is that it makes a big bet on the market there and takes out one of its major rivals, Louisiana Pacific, which sources believe would be unlikely to create any concern from competition regulators.
The New York-listed building materials manufacturer has a $US7.9bn market value.
It is the world’s largest producer of oriented strand board and manufactures engineered wood building products.
However, some believe that a deal with that company and James Hardie would be highly unlikely.
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