The Boral share price has been smashed 10% so far in May. What’s happening?

The building products company is facing several headwinds right now.

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Key points

  • As of yesterday's close, the Boral share price had lost 9.52% of its value since 1 May  
  • However, the building products company is rallying today with the rest of the market 
  • Buyers are circling for fellow building materials company BGC in Western Australia 

It’s been a tough month so far for the Boral Limited (ASX: BLD) share price which, at yesterday’s close, had lost 9.52% of its value since 1 May.

However, the building products company has joined in the broader market recovery today and is currently up 1.70%, trading at $3.29. For context, the S&P/ASX 200 Index (ASX: XJO) is up 1.71%.

What’s beating Boral down?

There has been no price-sensitive news out of Boral since its trading update and FY22 guidance on 22 March. However, there is some industry news today.

According to reporting in The Australian, Australia’s largest brick and tile manufacturer, Brickworks Limited (ASX: BKW) is entering the contest for the acquisition of competitor BGC.

BGC is a building materials company worth more than $1 billion and operating exclusively in the West Australian market. It was owned by the late billionaire Len Buckeridge. It’s now for sale through investment bank Macquarie Capital and PwC, according to the report.

Perth-based BGC owns the Midland Brick and Brikmakers brands. The article quotes IBISWorld estimates that the brands have about a 5% share of the country’s overall brick market. The brands were previously owned by Boral.

According to the article:

While the Australian Competition & Consumer Commission would oppose an acquisition by Brickworks of its business, the thinking is that the $3.4bn Australian-listed group could get around that opposition by offloading some of its own assets in that market.

The understanding is the family members of Buckeridge … want to sell it in one line to prevent tax leakage. But given the eclectic nature of the company, buyers will form consortiums for an acquisition.

Adbri has indicated an interest in BGC’s downstream assets, thought to be its concrete plants and quarries, with the ACCC likely to block any deal to buy its cement facilities. The Seven-controlled Boral is expected to take a look, while some believe that Holcim and Heidelberg will form a consortium to bid for the assets with their joint venture Cement Australia included.

Other headwinds for the Boral share price

Boral told the market back in March that poor weather and increased energy costs had put a dampener on its earnings. The company said its sales were lower due to building work being held up by major rain events in New South Wales and Queensland, as well as sharp increases in fuel and coal prices.

What do the experts think?

As fellow Fool Zach reported on 19 April, Boral was a buy at that time for Macquarie and Barrenjoey. It was a hold for Credit Suisse, Morgan Stanley, Jefferies, and JP Morgan. Barclay Pearce said sell.

Bloomberg data had a consensus price target of $3.69 per share at the time. The Boral share price closed the session on 19 April at $3.48.

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Bronwyn Allen has positions in Macquarie Group Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Brickworks. The Motley Fool Australia has positions in and has recommended Brickworks. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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