US private equity firms show appetite to pick up Boral’s American assets

Interest is fuelling expectations that the company will opt for a sale or a demerger of all its assets in that part of the world.

Mid-sized private equity firms out of the US are said to already be expressing a keen appetite to buy Boral’s North American assets.

The interest is fuelling expectations that the company will opt for a sale or a demerger of all its assets in that part of the world, with a takeover of the group now appearing increasingly unlikely.

This is with the Kerry Stokes-controlled Seven Group increasing its interest in the $5bn business in recent days to 19.9 per cent.

Members of the billionaire Stokes family, which also controls Seven West Media, are known to be tough negotiators and are unlikely to be interested in accepting any deal in which they do not gain a significant windfall on their investment.

This is likely to make a takeover of Boral difficult for private equity, which needs to generate returns of up to 30 per cent on their investments.

Boral, which recently appointed Zlatko Todorcevski as its new CEO, is amid a strategic review, with the results expected by the end of next month.

Working with Boral are Macquarie Capital and Flagstaff Partners, but a US-based investment bank is expected to be added to its advisers if it opts to divest its US-based operations. It has previously worked with JPMorgan.

Most expect a divestment, but Mr Todorcevski has said the company would take its time selling assets and they would be offloaded only at the right price.

Lone Star Funds has run the ruler over Boral in the past, as reported by DataRoom in October, but now other groups are said to be circling US assets.

It is understood that their aspirations are to take the entire US division off Boral’s hands then break up the business and sell off the various parts themselves, rather than only buying parts of the US portfolio.

Boral and Lone Star are known to each other following the joint venture Boral formed with Forterra for its US bricks operations in 2016. Forterra consists of the former Hanson’s building products division sold to HeidelbergCement in 2007.

Boral bought US-based building materials firm Headwaters for $3.5bn in 2016, in a deal considered a poor investment by shareholders.