CSR and Boral to Form Joint Venture
CSR Ltd. and Boral Ltd. recently announced plans to form a joint venture to combine their brick operations located on the east coast of Australia. CSR and Boral will approach the Australian Competition and Consumer Commission (ACCC) seeking clearance for the transaction.
The proposed joint venture will be owned 60% by CSR and 40% by Boral, reportedly reflecting the relative valuation of the two businesses. There is no cash consideration as part of the proposed joint venture.
The transaction will reportedly enable both Boral and CSR to access additional operational and overhead efficiencies that would otherwise be unavailable to the companies independently.
“The Australian cladding industry has faced major changes in demand over the past 30 years, resulting in a significant reduction in brick use,” said Mike Kane, CEO and managing director of Boral. “The reduced level of utilization in our brick manufacturing plants coupled with high input costs has meant that brick production in Australia has been increasingly challenged.”
“This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers in a broader cladding market,” said Rob Sindel, CEO and managing director of CSR. “It is about strengthening the opportunity for employees and reinvesting in the industry while delivering satisfactory returns through the building cycle.”