Australian building and construction products manufacturer CSR is in negotiations with rival Boral for the former to buy the latter’s brick and tile operations, a report in The Australian quotes sources knowledgeable with the deal as saying.
Though the report specifies that neither company involved would comment on current negotiations, CSR has previously confirmed there are opportunities for consolidation on the east coast brick market.
The report says current market estimates put the overall value of the brick and tile market in Australia at around $600 million – of which Boral is believed to hold roughly a 45 percent share.
Around Australia, manufacturers of bricks and other building products have been struggling amid weak demand.
Compared with the same quarter two years ago, for instance, ABS figures reveal that the combined volume of Terracotta and Concrete roofing tiles produced throughout the country was down almost one fifth in the June quarter this year whilst that of clay bricks for structural purposes was down 12 percent.
Four main players dominate the domestic brick and tile market: CSR, Boral, Ballarat-based Selkirk and Brickworks-owned Austral, and further consolidation within the industry is widely anticipated.
In Western Australia, according to one source quoted in the report, Boral’s brick business had previously been highly profitable but has struggled since 2009 when rival Perth businessman Len Buckeridge entered the market (with low levels of home building until recently in that market not helping).
Meanwhile, there are also rumours CSR may be after Selkirk, which is believed to turn over around 70 million bricks each year in Victoria, the only state in Australia in which CSR does not have a strong presence.
The latest developments come as BlueScope Steel earlier announced it would spend $87 million buying investment company Hills Holdings’ Orrcon steel business and Fielders building products business.