Fight over AdBri looming

Fight over AdBri looming
Published: 13 May 2004

Following reports yesterday that the  Australia’s competition watchdog ACCC was planning to block Boral’s US$862m takeover bid for rival Adelaide Brighton, with ACCC chairman Graeme Samuel saying he opposed the takeover as it was likely to have "significant detrimental effects" on competition in the downstream cement and pre-mixed concrete markets.  He has subsequently sought an undertaking from Boral that it would not proceed with its friendly $1.60 a share bid.  "If the undertaking is not given we will take appropriate action in the Federal Court," he said.

AdBri, through Swan and Cockburn Cement, dominates cement supplies in WA where Len Buckeridge’s BGC Cement is the other main supplier. It also owns Dongara Lime, one of the State’s biggest lime producers  But Boral’s share of the WA cement market is limited, and the ACCC said it was more concerned about Boral’s impending control of AdBri’s half-stake in ICL, one of the biggest cement distributors on the east coast.  "Adelaide Brighton, in conjunction with ... ICL, has proved to be a significant competitive element in the cement and concrete industries," Mr Samuel said. "The acquisition ... by Boral would restrict this independence and substantially alter the competitive landscape."

However, Boral was last night refusing to give in to the ACCC’s demands.  "Boral disagrees with the ACCC’s decision that the proposed acquisition is likely to have significant detrimental effects on competition in downstream markets," the company said.  While Boral was "reviewing its position", the bid remained open until June 4, subject to all previous conditions including approval by the ACCC.  But Boral was clearly surprised at the ACCC’s stance, having indicated it was prepared to divest AdBri’s stake in ICL. The stake is understood to have been offered to ICL’s other owner, the Barro Group.

"The proposed divestments which Boral has indicated ... will address competition issues which may arise," the company said.  But ACCC director Lin Enright said ICL was not the stumbling block, and the ACCC’s reasons for opposing the bid would explained fully later this month.  Ms Enright said the ACCC had held extensive talks with Boral, but its concerns had not been allayed "at this stage".  "But we are always open to discussions with the company," she said.