Landfill business to be sold
Australia’s Boral Limited has entered into an agreement to sell its Western Landfill business to Transpacific Industries (TPI).
TPI will pay $150 million to Boral upfront to purchase the business and $15 million for site preparation work. In addition, Boral will receive a long-term earnings stream from TPI in the form of fixed payments and volume-based royalties for the life of the landfill. Depending on volumes, this stream is expected to generate approximately $15 million/year, and may increase in time.
The transaction is subject to conditions, including clearance from the Australian Competition and Consumer Commission (ACCC). The landfill operations are on the same site as Boral’s Deer Park Quarry and its asphalt, concrete and related operations, all of which Boral will continue to own and operate.
According to the group, the landfill operations are not a core business area, and the sale will help to ‘further strengthen Boral’s balance sheet’.
“Taking a whole-of-life perspective to managing our quarry assets is an important priority for Boral in terms of both sustainable land management and shareholder value-creation,” said Boral’s CEO & Managing Director, Mike Kane. “As with all of our quarry end-use projects, we look to maximise value through the extraction of quarry materials and then selling the land at a time when it makes sense, using the cash to deliver value to shareholders. In this case, we have developed a very elegant and efficient solution where a third party landfill operator will concurrently use the air space created from our ongoing quarrying activities at Deer Park for much needed landfill activities.”
“The opportunity to deliver value by divesting the Western Landfill business while retaining an ongoing long-term earnings stream is highly attractive. Moreover, the sale of the landfill business to TPI, an industry-leader, which requires additional landfill capacity to deliver on its strategy, provides for a genuine win-win outcome for both companies,” added Kane.
Bricks joint venture gets go-ahead
The ACCC has announced that it will not oppose Boral and CSR Limited’s proposal to combine their brick operations. The joint venture, which comprises their brick operations on Australia’s east coast, was first announced in April 2014. Boral will hold a 40% stake in the venture and CSR will own the remaining 60%.
“The ACCC’s view is that the proposed joint venture would be unlikely to substantially lessen competition,” stated ACCC Chairman, Rod Sims. “Critical to the ACCC’s decision was the assessment that Boral would be unlikely to remain in clay brick manufacturing in eastern Australia if the joint venture does not proceed. Without this conclusion, the proposal raised considerable competition concerns.”
Now that ACCC has granted approval, integration planning can be accelerated. The joint venture is expected to be completed in 1H15.
“We are very pleased with the ACCC’s decision to allow our east coast bricks joint venture to proceed. This is good news for customers, employees and shareholders. With Australian brick manufacturing being challenged as a result of a reduction in brick usage and high input costs, the joint venture will allow us to drive efficiencies across the combined network of operations, creating a more sustainable business,” commented Kane.
Adapted from press releases by Louise Fordham
Read the article online at: https://www.worldcement.com/asia-pacific-rim/18122014/accc-clears-boral-csr-bricks-joint-venture-41/