sydney<u+2014> boral ltd. of australia agreed to a us$1.86 billion deal to acquire building-products company headwaters inc., betting on the u.s. as house construction ramps up and president-elect donald trump vows to boost infrastructure spending. on monday boral said it had signed a binding agreement to buy the utah-based manufacturer, one of the largest u.s. sellers of the concrete ingredient fly ash, for us$24.25 a share in cash. that represents a 34% premium to headwaters<u+2019> one-month, volume-weighted average stock price, it said. the deal <u+201c>increases boral<u+2019>s exposure to the u.s. building and construction markets, which are experiencing positive momentum,<u+201d> boral said. the acquisition would be partially financed by a 450 million australian dollar (us$330 million) institutional placement and a a$1.6 billion accelerated renounceable entitlement offer. the company will also use some debt and existing cash. the deal would double the size of boral<u+2019>s u.s. business and expand the building-materials supplier<u+2019>s reach in fly ash, <u+201c>which will play favorably into the infrastructure spend under way in the u.s.,<u+201d> the company said. fly ash is a byproduct of burning pulverized coal, and is most commonly used as a partial replacement for cement in producing concrete. mr. trump has said he would prioritize plans for us$1 trillion in infrastructure investment over 10 years, promising to <u+201c>rebuild our highways, bridges, tunnels, airports, schools, hospitals.<u+201d> some industry experts have raised concerns over the proposal, saying the spending would rely on private financing that would likely fall far short of that level. boral, which has a market value of a$4.57 billion, has been upbeat on the outlook for its u.s. business because of forecast growth in home building. the u.s. housing market, hit hard by the recession, has been rebounding. housing starts and permits for new construction rose in october ; the former increased at the fastest pace since august 2007. barclays said that matched its expectations of a steady improvement in the u.s. housing market over the next two years. there is uncertainty in the market too, though. expectations have risen for a december u.s. interest-rate increase that could damp demand. headwaters, of south jordan, utah, also manufactures stone, roofing and siding products for building markets. new residential buildings account for roughly one-third of the company<u+2019>s revenue, while infrastructure makes up about 13%. <u+201c>headwaters has been rigorously assessed and with its highly complementary portfolio of assets, which are strategically aligned with a number of boral<u+2019>s existing u.s. businesses, this is a highly compelling acquisition for boral,<u+201d> said brian clark, boral<u+2019>s chairman. kirk benson, chairman and chief executive of headwaters, said the tie-up would <u+201c>create one of the leading manufacturers and distributors of building products and construction materials for infrastructure, new-residential, repair-and-remodel, commercial and institutional construction.<u+201d> on nov. 1, headwaters posted a 9% rise in annual revenue, to us$974.8 million, although it said net income slumped roughly 60% mainly because of tax adjustments. it projected higher sales of fly ash and building products in the year ahead and said initiatives to improve efficiency would help widen earnings margins. the deal, unanimously recommended by headwaters directors, is expected to close in mid-2017. write to rhiannon hoyle at rhiannon.hoyle@wsj.com
boral to acquire headwaters inc.  - wsj
rhiannon hoyle