French construction conglomerate Saint-Gobain has announced a US$4.32 billion (A$6.57 billion) takeover bid for Australian building materials company CSR Limited.
The offer includes the assumption of liability for CSR's asbestos-related claims.
CSR's board has recommended the deal to its shareholders, citing the proposal as providing "attractive value and certainty". The bid price of $9 per share is a 33% premium over CSR's closing share price on February 20.
CSR was originally founded in 1855 as a sugar refining company but now boasts a diverse portfolio of building products, including Monier Roofing, PGH Bricks and Gyprock.
CEO Julie Coates highlighted the "strong strategic and cultural alignment" between CSR and Saint-Gobain, emphasising the deal's potential benefits for CSR's employees and customers while ensuring the continuation of high-quality building solutions in their market sectors.
“The transaction also offers opportunities for our other stakeholders, including the CSR team and customers,” Coates said. “Our focus remains on delivering outstanding building solutions for our customers and the building and construction markets in which we operate.”
Acquiring all aspects of CSR
Coates confirmed that Saint-Gobain's purchase encompassed all aspects of CSR, including the responsibility for asbestos claims arising from its historical involvement in asbestos mining and product manufacturing, which ceased in 1966 and 1977, respectively. CSR has been managing these claims for decades, with an asbestos provision reported at $187.1 million as of last September.
Furthermore, the acquisition might lead to a review of CSR's stake in the Tomago aluminium smelter, with a commitment to securing an adequate power supply. This comes as Tomago Aluminium prepares for negotiations on a new electricity contract, drawing significant interest from renewable energy providers.
CSR chairman John Gillam expressed the board's unanimous support for the takeover, following careful consideration and negotiation since the initial offer in January. He anticipates no objections from the Foreign Investment Review Board and expects Saint-Gobain to pursue the necessary approvals promptly.
Gillam said the offer “provides attractive value and certainty” for CSR shareholders.
“The board has very carefully considered the terms of the proposal and is unanimous in its recommendation to shareholders,” said Gillam. “The final proposal follows an initial offer in early January this year and a period of negotiation.”
This acquisition comes amid a wave of consolidation in the Australian building materials sector, including Seven Group's recent bid for Boral and CRH (LON:CRH)'s interest in taking AdBri private. Saint-Gobain's primary interest in CSR appears to be its plasterboard operations, with speculation about the future of its bricks business.
Coates also commented on the robust housing demand in Australia, fuelled by immigration, low unemployment and government stimulus, despite challenges such as labour and material shortages extending project timelines.