World news – AU – Australian Boral sells stake in JV, watches US ends when virus recedes

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SYDNEY / BENGALURU (Reuters) – Australia’s leading building materials maker Boral Ltd BLDAX has said it is selling its plasterboard business and considering leaving the United States, a downturn from a strategy of global expansion as the new coronavirus hits the construction markets

The reshuffle effectively ends a seven-year offshore acquisition frenzy that led to a major depreciation in 2020, and focuses the company on its domestic operations which generate about half of its profits The company’s AUD 6 billion (43 billion) hired a new chief executive in July to review the business

At its annual meeting on Tuesday, the company announced that it would sell its half of the USG Boral plasterboard joint venture to German co-owner Gebr Knauf KG for $ 1015 billion, ending an agreement that began in 2013 and which has allowed it to be present in the segment in Asia and the Middle East as well as in Australia

Boral has said in the meantime it will consider selling assets in the United States, where a 2016 acquisition of rival Headwaters resulted in a downgrade in earnings, an impairment charge and the discovery of earnings overvalued for the newly purchased company

“As the industry is fully aware that we have undertaken a global portfolio review, we have been contacted directly and indirectly with third party interest in our US assets,” said Boral CEO Zlatko Todorcevski during the annual meeting

« We intend to explore third party interest in our North American construction products business to assess whether there are better opportunities for value creation »

Boral shares were 4% higher in morning trading, versus a larger market AXJO fell 13%, as analysts applauded a higher-than-market sell price for the stake in the joint venture and a possible exit from an underperforming U Company

« Knauf’s price will likely have exceeded market expectations and will begin a process of balance sheet consolidation that will accelerate, » Jefferies analysts wrote in a client note in which they valued the asset at $ 900 million of dollars

“The BLD of tomorrow will be very different from the BLD of today,” they said, referring to Boral using its stock code

Report by Byron Kaye in Sydney and Shruti Sonal in Bengaluru; Editing by Grant McCool and Christopher Cushing

All quotes were delayed by at least 15 minutes See here for a full list of exchanges and delays

Boral, ASX, Knauf, ASX: BLD, Construction

World news – AU – Australian Boral sells stake in JV, watches US ends when virus recedes

Source: https://uk.reuters.com/article/us-boral-divestment/australias-boral-sells-jv-stake-eyes-u-s-exits-as-virus-prompts-retreat-idUKKBN27C020

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