The prospect of a takeover and even break-up of Australia’s biggest seller of building materials, Boral, comes as the industry at large faces cost pressures and the likelihood of flat earnings until 2009. The sector has largely been ignored during the recent spate of takeovers, though Cemex’s bid for Rinker Group has been endorsed by Rinker’s shareholders. If this deal goes ahead as expected, Cemex may sell the local Readymix cement business, worth up to $2.5 billion. Meanwhile, James Hardie may also be broken up, as it aims for more growth in the US and a move away from its controversial Australian past.
Boral, for its part, will probably be the victim of moves from the ubiquitous Macquarie Bank, which has a proven record of putting together buyouts that the market has previously deemed unworkable. Its likely success with Qantas will probably mean similar success with Boral. However, Boral’s shareprice has been downgraded by Credit Suisse and Citigroup, reflecting current industry pessimism. Its failed friendly takeover of Adelaide Brighton has also hampered growth.
However, growth forecasts are positive, and Boral continues to look a likely acquisition.