The Boral Limited (ASX: BLD) share price was out of form on Friday and dropped lower with the rest of the share market.
Not even a late announcement could stop the building materials company's shares from falling 2% to $4.82.
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What did Boral announce?
This afternoon Boral announced that together with its joint venture partner, an affiliate of Lone Star Funds, it has agreed to sell the North American based Meridian Brick business to Wienerberger.
According to the release, the parties have agreed a consideration of US$250 million, which remains subject to customary adjustments. This equates to US$125 million for Boral's 50% share, prior to any adjustments.
Subject to exchange rates and final adjustments, the company is expecting to report a small pre-tax accounting profit on sale of approximately A$10 million at closing.
Though, it has warned that the transaction is subject to various closing conditions and regulatory approvals. If all goes to plan, the parties are targeting completion in FY 2021.
Goodbye bricks.
The sale of the Meridian Brick business is the final step in Boral's exit from brick operations globally.
Boral's CEO and Managing Director, Zlatko Todorcevski, commented: "In recent years Boral has divested its interest in bricks in Australia and since forming the bricks joint venture in the US with Lone Star in 2016, the plan was to ultimately prepare the business for sale."
"As part of this process, Meridian's leadership was refreshed with the appointment of a new CEO in December 2018, and a stronger focus on improving performance," he added.
Mr Todorcevski believes that Boral has received is a good price for the business and that it "reflects its improved performance."
What now?
The CEO expects the divestment to allow the company to focus on improving the performance of other areas of the business.
"The divestment of Meridian is a further step in Boral's portfolio review works. It helps to streamline our US business and allows us to further focus on the improvement initiatives underway in the remaining businesses in Boral North America," he concluded.
