Boral Ltd, Australia’s second-largest building materials maker, declined to say whether it would be able to buy out partner Lafarge’s stake in their U.S. rooftiles joint venture MonierLifetile.
Lafarge, the world’s biggest cement maker, is selling its global roofing business unit to private equity firm PAI Partners.
That may see Boral spend as much as A$350m ($217 million) to bring its 50 per cent holding in MonierLifetile up to 100 per cent, analysts at UBS said.
"We’re really not in a position to comment on what our joint venture agreements have in them," a Boral spokeswoman said when asked if the group had a pre-emptive right to buy Lafarge’s stake.
"We do have a 50 per cent share of the MonierLifetile venture in the U.S. That’s an important part of our business and we have been growing increasingly offshore. That has been part of our strategy," she said.
Boral expects a 15 per cent drop in profit this year after economic conditions in its key U.S. and New South Wales markets, which together make up about 60 per cent of earnings, have been worse than anticipated.
"UBS thinks it likely Boral’s venture with Lafarge in the manufacture and sale of concrete rooftiles in the U.S. contains pre-emptives that would enable Boral to acquire Lafarge’s 50 per cent stake if it wishes," UBS analyst David Leitch said in a report.
"Although the timing is imperfect we believe such longer-term growth opportunities in the USA cannot be passed by," Leitch said.
He estimated Boral may need to spend between A$275m and A$350m on MonierLifetile and would probably fund the purchase with debt.