In what’s possibly the first (and certainly not the last) M&A deal on the heels of recently announced bipartisan support for the Biden Administration’s Infrastructure Plan, Australia’s largest brick maker Brickworks announced on Monday that it is buying a portfolio of assets from U.S. construction materials giant Southfield Corporation.
The sale price was $51.1 million. The deal, which is being funded entirely through existing debt financing facilities, is expected to add 2 percent to Brickworks’ per-share earnings in Year One, excluding cost synergies and growth initiatives.
The assets, which are being transacted through Brickworks’ North American subsidiary Glen-Gery, include the largest independent brick distributor in the United States, Illinois Brick, as well as Indiana Brick, Rose Brick, Edgewood Landscape Supply, Lafayette Masonry Supply and Kokomo Masonry and Landscape Supply locations.
In a comment on the deal, Brickworks N.A. President Mark Ellenor said the acquisition is strategically important to the parent company, providing Brickworks with a larger presence in the Midwest and expanding its network of company-owned distribution locations from 10 to 27. Existing Glen-Gery manufacturing facilities in the Midwest are located in Adel and Sergeant Bluff, Iowa; Caledonia and Iberia, Ohio; Marseilles, Illinois; and Cynthiana, Kentucky.
Announcing the deal in a presentation to shareholders on Monday, Brickworks Managing Director Lindsay Partridge elaborated on the strategic appeal of the U.S. Midwest, specifically for bricks. “Illinois and Indiana are two major states within our key target market in the Midwest, and both have a strong heritage of brick construction. We currently lack a direct distribution presence in these states and as such this acquisition is a logical strategic fit,” Partridge said.
“The outlook for the region is strong, with building activity expected to increase over the next five years, across both residential and non-residential segments. Recently announced government stimulus, including support for state and local infrastructure projects such as schools and universities, is also expected to boost construction activity in the region.
“Although the pandemic has hit our U.S. operations hard over the past year, with the vaccine program now well advanced, and the economy re-opening, we are seeing a strong recovery in demand. We continue to see the North American brick industry as a highly attractive long-term growth opportunity for Brickworks with a positive market outlook,” Partridge added.
In addition to being Australia’s largest building materials company, Brickworks is a dividend aristocrat, having paid out to its shareholders every year since first listing on the Australian Stock Exchange (ASX) in 1962. Its Building Products North America division is the leading brick producer in the U.S. Northeast, and includes its flagship brand, Glen-Gery.
