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ACCC greenlights Boral-CSR brick-making merger

December 19, 2014 • News

The Australian Competition and Consumer Commission (ACCC) has approved the proposed clay brick joint venture between CSR and Boral, thus paving the way for both parties to progress  the remaining administrative and contractual issues for formation of the entity.

Image credit: flickr user: Danser, Inc.

Image credit: flickr user: Danser, Inc.

The Australian competition watchdog previously flagged concerns that the proposed joint venture would create a duopoly and cause a spike in brick prices, but later decided to back the merger because it believed that Boral would pull out of brick-making in eastern Australia.

“The ACCC’s view is that the proposed joint venture would be unlikely to substantially lessen competition,” ACCC Chairman Rod Sims said.

“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.”

The proposed joint venture, which was announced in April, will be 60% by CSR and 40% by Boral, reflecting the relative valuation of the two businesses.

“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,” said Boral’s CEO & Managing Director, Mike Kane.

“This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers. It will strengthen opportunities for employees and ensure that customers benefit from a strong supplier in the highly competitive cladding market in Australia,” added CSR’s CEO & Managing Director, Rob Sindel.

According to the joint press release by Boral and CSR, with combined revenue in the order of $230 million, initial overhead savings of $7-$10 million per annum are expected following the formation of the joint venture and integration of the businesses.

The formation of the joint venture is expected to be completed in the first half of calendar year 2015.

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