Boral’s cement bid still alive

Boral has refused to concede defeat in its $1.07 billion takeover bid for Adelaide Brighton, defying the Australian Competition and Consumer Commission by keeping its offer on the table. Investors were less confident, however, as Adelaide Brighton shares slumped 21 per cent in response to the competition watchdog’s rejection of the bid.

In a further sign Boral may contest the decision in the Federal Court, the company said the offer to AdBri shareholders remained and it would give the ACCC three days notice if it intended to go ahead with the takeover.

Even if the deal did not go ahead, analysts said Boral could keep its 19.9 per cent strategic stake in AdBri. It’s probably a good position to have a holding in someone you compete with, Boral has acceptances for 43.4 per cent of AdBri.

The ACCC believes a merged Boral-AdBri entity would significantly dilute the competitive position of smaller independent producers or importers. For instance, it is understood the ACCC does not agree with Boral’s position that cement imports would counterbalance a market being controlled by Boral-AdBri and the Holcim-Rinker-Hanson co-owned Cement Australia. If the deal were allowed, Boral would control 55 per cent of Austalia’s cement production (8.6Mt).

Boral has argued the "substantial excess" of cement production in South-East Asia (50Mta) provides a significant import threat, although others have pointed out the excess capacity could soon be swallowed up by China (original report: Sydney Morning Herald)