* Boral agrees to buy Headwaters for $1.8 bln
* Announces $1.5 bln share issue to fund deal
* Combined firm would be biggest fly ash supplier in U.S.
* Trump plans big push in infrastructure spending
(Recasts on equity value of the deal, adds analyst and company
By Tom Westbrook
SYDNEY, Nov 21 Boral Ltd, Australia's
biggest supplier of building materials, said it would buy
Headwaters Inc for $1.8 billion in cash, doubling its
U.S. presence at a time when President-elect Donald Trump plans
a huge jump in infrastructure spending.
The combined entity would become the largest U.S. supplier
of fly ash, a key ingredient in concrete. Trump has said
infrastructure spending will be a priority and aims to spend $1
trillion over 10 years.
U.S. housing starts are also surging, climbing to a more
than nine-year high in October as builders ramped up
construction of both single and multi-family homes.
Boral Chief Executive Mike Kane, who is U.S.-born and has
worked for several U.S. construction materials companies, said
Trump's plans had not factored into the decision to acquire
Headwaters but would naturally be positive given its strong
position in fly ash.
"That'll be all gravy if in fact that happens," he said on
a conference call with reporters.
The offer of $24.25 per share, represents a 20 percent
premium to Friday's closing price of the Salt Lake City,
The deal will be funded by an A$2 billion ($1.5 billion)
share issue, as well as $835 million in borrowing and A$485
million in existing cash.
"The acquisition price in our view is fair but not cheap,"
Royal Bank of Canada analyst Andrew Scott said in a note to
clients on Monday.
"We remain conscious that there is a mix of assets and
attractiveness across the Headwaters portfolio."
The deal, which has an enterprise value of $2.6 billion,
would increase Boral's flyash business fivefold and double the
size of its U.S. roofing and manufactured stone divisions.
It would also add Headwaters' windows and trim products to
Boral's more modest light building products division, and
increase the company's exposure to markets in the midwest and
Boral chief Kane also said the deal would provide cost
savings of around $100 million per annum within four years of
closing, which is expected in mid-2017.
Boral shares closed at A$6.15 on Friday, giving it a market
value of around $3.4 billion. Shares issued as part of the
deal's capital raising will be priced at A$4.80, Boral said. Its
shares are in a trading halt until Thursday.
($1 = 1.3652 Australian dollars)
(Reporting by Tom Westbrook; Editing by Jane Wardell and Edwina