Adelaide Brighton has broken into the South Australian concrete market and north Queensland cement distribution through acquisitions worth $174 million, in what some describe as a defensive play by the building materials provider following a profit downgrade and a major contract loss earlier this year.
Chief executive Martin Brydon said the acquisitions followed a $112m investment program to improve capacity, efficiency and sustainability in the cement and lime division and recent downstream acquisitions, which had built a strong market position in the eastern states in concrete and aggregates. The price was 9. 8 times earnings before interest, tax, depreciation and amortisation.
In South Australia, Adelaide Brighton will enter the state’s concrete market by buying Direct Mix Concrete and Southern Quarries, the largest independent aggregate and pre-mixed concrete supplier to the Adelaide building, construction and infrastructure market.
Analysts said the company recently expanded its cement capacity at its Birkenhead plant in South Australia, but other competitors had tipped more product into the market, creating an oversupply, and the latest purchase would firm-up its market position.
Read more here: Business Spectator