AUSTRALIA: Boral and CSR allowed to merge clay brick businesses

BORAL and CSR have been given a surprise green light by the competition watchdog to merge their clay brick businesses.

The Australian Competition & Consumer Commission was expected to reject the merger.

But yesterday the ACCC decided to allow the merger after being convinced by Boral that without it it would shut down or sell its bricks business.

Earlier this year, the ACCC said it was sceptical of Boral’s stance that it would abandon brickmaking in Australia in an interim report on its review of the merger deal that will create an entity with a combined revenue of $230 million.

Boral chief executive Mike Kane described the decision as a “welcome surprise”. He said he and CSR chief executive Rob Sindel had delivered a number of presentations to the commission.

“I did one presentation myself after the findings came out and it was, I would say, a very frank exchange — I’m being as polite as I can,” Mr Kane said.

“I was quite unhappy with the interim result that came out an
d I made it very clear it was not ­consistent with what I knew the facts to be.

“ We had a fair hearing and we hit it out.”

Mr Kane said the joint venture deal was a “last-ditch effort” to save the industry in Australia. “This will give us a business that will have the ability to earn the cost of capital.” Under the merger transaction, Boral will own 40 per cent of the merged vehicle while CSR will hold a 60 per cent stake.

The venture is expected to ­result in a wave of redundancies.

Both companies will downsize their number of brick manufacturing facilities from 12 locations in Queensland, NSW, Victoria and South Australia. Yesterday, Mr Kane declined to say how many jobs would be lost or identify the facilities to be closed.

Boral and CSR have estimated the venture will deliver between $7m and $10m of savings each year with jobs in sales, administration, marketing across both companies expected to go. Both CSR and Boral were driven to merge their brick businesses in the wake of a raft of new products being used to build homes including concrete panels and timber claddings.

Mr Sindel said the venture was about retaining manufacturing in Australia and keeping clay bricks 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,” he said.

ACCC chairman Rod Sims said after a full investigation the commission found there was enough evidence to support Boral’s claims it would exit brick manufacturing on the east coast.

Source THE AUSTRALIAN