Adbri (formerly Adelaide Brighton) has entered into an exclusivity agreement after receiving a takeover proposal from a consortium comprising two major building materials businesses.

Dublin-based CRH’s Australian subsidiary and Victorian building materials firm Barro Group – which owns 42.7 per cent of Adbri – put forward the offer, which would see the pair acquire the entirety of the Adelaide-headquartered company for $3.20 cash per share.

This implies an equity value of $2.1 billion for Adbri – founded in 1882 and one of South Australia’s top 10 companies per the South Australian Business Index.

Adbri said there was “no certainty that the proposal will lead to a binding proposal for consideration by Adbri shareholders”, but the company has demonstrated its interest by entering into a process and exclusivity deed with CRH and Barro today to “progress a potential transaction”.

As two of Adbri’s directors are Barro family members – including Adbri chair Raymond Barro – the company has established an Independent Board Committee (IBC) chaired by Samantha Hogg to mull the proposal. The Barros and Geoff Tarrant – another Barro representative – have recused themselves from the Adbri board while the proposal is under consideration.

Today, the board said it intended to recommend the offer to shareholders.

“Subject to agreement of a binding scheme implementation agreement on terms acceptable to the parties, the intention of the Independent Board Committee is to unanimously recommend the proposal, in the absence of a superior proposal and subject to an independent expert concluding that the scheme of arrangement is fair and reasonable and in the best interests of Adbri shareholders,” Adbri said.

At $3.20 per share, the proposal represents a 41 per cent premium for Adbri shareholders as of 15 December.

The consortium’s offer is the “best and final price” too, in the absence of a superior and competing proposal.

In addition to a go-ahead from the IBC, the deal would require CRH to complete due diligence on Adbri, Foreign Investment Review Board approval and a nod from shareholders.

The period of exclusivity will last until 28 February, allowing CRH to perform due diligence and to “enable the parties to continue discussions in order to determine if acceptable transaction terms can be agreed”.

For Adbri, the announcement comes after it told investors last Friday it expects record full year earnings within the range of $310-315 million – ahead of the previous outlook announced in August 2023.

At a press conference today, Premier Peter Malinauskas said there was “no concern here for the plant in Adelaide”.

“In fact, I think the fact that there is so much interest of an international nature in this asset bodes well for the direction that ADBRI is on and that facility in particular,” the Premier said.

“We know that the housing and construction sector generally in South Australia is going to need a lot more of Adelaide Brighton’s cement products into the future, between the infrastructures plan and the housing demand that exists in South Australia on the back of a strong economy.

“This is a company that’s got a bright future and I think this international interest speaks to that.”

Business SA Chief Executive Andrew Kay said a potential takeover of Adbri was disappointing for the local business community.

“Given the current ownership structure, this takeover news does not come as a great surprise, however, Adbri has been a true South Australian success story and we never like to see control of our flagships businesses leave the state,” Kay said.

“As always, Business SA hopes local jobs are protected should a takeover proceed and local operations remain intact.”

The offer comes nearly two weeks after SA’s top company Santos confirmed it was in merger talks with energy giant Woodside.

That news seemed to spook the state government, with Energy and Mining Minister Tom Koutsantonis announcing his office would “do everything it can to ensure South Australian jobs are protected and that companies headquartered in South Australia remain in South Australia”.

He added later that he would use powers, including those governing the licensing of gas extraction, to ensure that Woodside was brought to the negotiation table with the government should it seek to “relocate” Santos resources out of the SA.

“I’m watching this; I am monitoring this,” he said.

“There are regulatory powers that we have. The South Australian government will not be a bystander here. If Woodside have ambitions to take over Santos, to merge with Santos and relocate any resources out of South Australia they’ll be having serious discussions with the South Australian government.

“We will be using every inch of the regulatory powers that we have, including licensing, to ensure they are brought to the table to speak to the South Australian government.”

Business SA chief Andrew Kay also raised concerns about the move, saying Santos was “the biggest game in town” and if a merger went ahead the “effects to businesses in the supply chain could be quite severe”.

Shares in Adbri are up 28.41 per cent to $2.92 per share in early trade today.

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