Monday saw cement business ABC receive a takeover bid from the largest shareholder, Victorias Barro family (~43%) and NY-listed Irish building giant CRH. The $2.1mn buyout proposal offered more hope to the long-suffering shareholders in one fell swoop than the board achieved over the last five years. The proposal at $3.20 saw the stock pop over 30%, although it still closed ~7% below the bid due to the ongoing risks associated with the approach; we’ve seen plenty of good deals fall over in 2023, although there shouldn’t be any skeletons in the closet for the Barro family. The Adbri (ABC) board intends to recommend the deal to shareholders, with the Foreign Investment Review Board (FIRB) the likely main stumbling block.
- We like the deal for shareholders, especially considering the risks for cement volumes and the economy in general moving into 2024.
Interestingly, despite the significant premium offered by the suitors, the stock remains comparatively cheap after its five-year decline, trading on a valuation of 17.7x for CY23, whereas James Hardie (JHX) is trading on 21.7x earnings.
MM is bullish ABC ~$3, anticipating a successful takeover
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This morning, we’ve briefly looked at four major ASX building stocks following the bid for ABC; the sector has been a standout performer over the last 18 months.
