US private equity fund CD&R joins the race for Boral’s assets

The outcome of Boral’s strategic review is expected to be revealed at its AGM on Tuesday.

Another party has emerged as a potential buyer of Boral’s assets in the US when they come up for sale — private equity firm Clayton, Dubilier & Rice.

The outcome of Boral’s strategic review is expected to be revealed at its AGM on Tuesday and most are betting that it will involve a sale or a demerger of its US operations.

CD&R is a US private equity firm that manages $US30bn invested in 90 businesses, and has a strong track record of investing in the building products industry.

About half of its investments are assets sold by corporates.

The company is understood to invest mainly in the US and Europe. It owns a laminates manufacturer called Wilsonart, a major competitor to the Formica business that was previously owned by Fletcher Building.

Earlier, DataRoom reported that French building materials company Saint-Gobain could be a contender, while Lone Star Funds is known to have held talks with Boral about a possible acquisition.

Lone Star recently sold The American Bath Group to Centerbridge Partners in a deal reportedly worth as much as $US2bn, so that private equity firm may also be circling.

Macquarie Capital and Flagstaff Partners have been working for Boral, but a North American bank could be appointed if the US business is put up for sale.

Boral, led by the recently appointed Zlatko Todorcevski, purchased the US-based Headwaters for $3.5bn in 2016 but investors have expressed disappointment over its performance.

In the US, Boral operates in fly ash, stone and roofing, light building products, windows and concrete blocks.

Talk of a sale or demerger comes after Link Administration announced on Friday it would reject a $2.8bn bid by The Carlyle Group and Pacific Equity Partners and explore a demerger of Property Exchange Australia, of which it owns 44 per cent.

The understanding is that a demerger could be completed by the first quarter of next year. The move could increase its value by attracting a different mix of investors, attracted to high growth businesses rather than stable income earners like the rest of Link.

Earlier this year, PEXA hired Grant Samuel to examine its capital structure, as reported by DataRoom in June, and at that time some investors believed a float of PEXA could be on the cards.

PEXA was purchased for all equity in November 2018 in a $1.6bn joint bid with CBA and Morgan Stanley Infrastructure Partners.