Ibstock selling US brick business
UK firm announces sale of US manufacturer Glen-Gery to Australia’s Brickworks Ltd for US$110 million
UK-based Ibstock plc have announced the sale of 100% of the issued share capital of Glen-Gery, their US brick-manufacturing business, to Brickworks Ltd, Australia’s largest brick manufacturer, for an enterprise value of US$110 million.
Glen-Gery have leading market positions in the Midwest, Northeast and Mid-Atlantic US states and sell around 230 million bricks a year. They have 10 manufacturing plants, 29 active quarries and more than 600 staff.
As part of the transaction Brickworks Ltd will assume certain liabilities, including an associated pension liability, and the net cash inflow for Ibstock is expected to be approximately US$95 million, subject to any closing account adjustments.
Ibstock say the proceeds received will be used to repay debt. As a result of the disposal, and in combination with strong underlying cash generation, the Group expects its net debt to be around £50 million by the end of 2018, further strengthening the company’s balance sheet and leaving Ibstock well positioned to invest to deliver long-term growth as they focus on their core markets in the UK.
Ibstock’s chief executive officer, Joe Hudson, commented: ‘At the interim results in August we announced that we were undertaking a strategic review of certain aspects of our business, including our US operations, with a further update to be given at the full-year results in March 2019.
‘We have concluded that opportunities to grow the US business are not in line with our overall strategic objectives, and the decision was taken to dispose of these assets and refocus the Group on its core markets here in the UK. Following a competitive process, we believe that this is the best outcome for both Glen-Gery and Ibstock plc.
‘This divestment augments our strong underlying cashflow generation, leaving us with a strong balance sheet. Our capital allocation and shareholder return priorities remain unchanged, and we continue to assess both organic and inorganic investment options in the UK as we look to deliver long-term growth.’
Brickworks Ltd’s managing director, Lindsay Partridge, said: ‘The acquisition of Glen-Gery represents a significant milestone in the history of Brickworks. We believe the transaction provides an ideal entry into the US market, with Glen-Gery having established a leading market position in the key North-Eastern region, a reputation for premium products, and high exposure to the architectural market.’
Brickworks say they intend to operate Glen-Gery separately to their business in Australia, with the existing Glen-Gery management team remaining in place, reporting to Mark Ellenor, (previously group general manager of Austral Bricks and Bristile Roofing), who will relocate to the US. The transaction is expected to close within the next few days.
