“Brick-solid” entry into US with acquisition of a large brick maker for 8.5x EBITDA

On November 23, 2018, it was announced that Australia-based Brickworks Limited (ASX:BKW), a publicly traded manufacturer of building products, entered into a binding agreement to acquire 100% of US-based Glen-Gery Corporation from Ibstock plc (LSE:IBST), in a deal worth $110 million. Glen-Gery was included as part of the divestment of the Ibstock group of companies from CRH plc in 2014, which was acquired by Bain Capital for £400 million. Under the terms of the deal, Brickworks will pay $95 million in cash and assume $15 million in pension liabilities and debt.

For the trailing twelve months ending August 31, 2018, Glen-Gery reported revenue and EBITDA of $118 million and $13 million, respectively, translating to an acquisition revenue multiple of 0.93 and EBITDA multiple of 8.46.

Founded in 1890, Glen-Gery has been creating quality brick products for well over a century. Today, Glen-Gery is one of the largest brick manufacturers in the US, operating nine brick manufacturing facilities and one stone manufacturing facility, which produces over 600 brick products and a variety of stone, mortar, and thin tech products. Glen-Gery’s operations are focused primarily in the Midwest, Northeast, and Mid-Atlantic US states.

Brickworks expects the acquisition to be low single digit EPS accretive and provide both short and long-term value creation and growth opportunities. Brickworks intends to keep the existing Glen-Gery executive management team intact. Mark Ellenor, President, Brickworks Building Products North America, stated, “We believe the transaction is an ideal market entry into the attractive U.S. industry, with Glen-Gery having established a leading market position in its core geographic area and a reputation for excellent product quality. By combining these two great businesses, we can learn from each other and become even better.”

Brickworks will fund the acquisition with a committed bridge facility up to $140 million.

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