ACCC approves Midland Brick sale

BGC Australia’s move to acquire Midland Brick has been given the all clear by the consumer watchdog.

The Australian Competition and Consumer Commission released a statement today detailing that it did not oppose BGC Australia’s move to acquire Midland Brick.

BGC announced in September that it had struck an agreement to buy the Midland Brick brand and its manufacturing operations, pending a number of regulatory conditions and ACCC approval.

Boral sold Midland Brick, along with its associated land holdings, for $86 million last year to a consortium comprising Fini Group, Linc Property (which have since merged under Hesperia) and Birchmead.

The consortium recognised the property development potential of the Midland Brick landholdings, and decided to offload the brickmaking company earlier this year for an undisclosed sum.

BGC chief executive Daniel Cooper said the play for Midland Brick was part of the company’s strategy of strengthening its core business, which included a focus on its vertically integrated building and materials businesses.

That includes BGC Fibre Cement and BGC Plasterboard and the group’s other building products divisions; Brikmakers, Harmony Roof Tiles, GTEK Plasterboard and more.

The ACCC today acknowledged that both Midland Brick and BGC manufactured and supplied clay bricks in WA as well as other clay and masonry building products.

“We examined the proposed acquisition carefully, because it would combine two of the three major suppliers of clay bricks in the WA market,” ACCC commissioner Stephen Ridgeway said.

“A key factor in the ACCC’s decision was the likelihood that Midland Brick and its production capacity would exit the market entirely if the proposed acquisition did not proceed.”

The ACCC said it had investigated the likelihood that Midland Brick would continue to operate or be sold to an alternative purchaser if the proposed acquisition did not proceed.

The consumer watchdog said it had also reviewed internal business records and conducted compulsory examinations of key industry participants.

“There was sufficient evidence that showed that without the proposed acquisition the owners of Midland Brick would move to demolish the brick kilns, and the exit of Midland Brick from the market would likely be brought forward,” Mr Ridgeway said.

“We concluded that the exit of Midland Brick would be a worse outcome for competition compared to the proposed acquisition proceeding.”

“Feedback from industry participants indicated that it was important that the production capacity of Midland Brick remained in the market over the medium term to meet future demand,” Mr Ridgeway said.

“We determined that regardless of whether BGC acquires Midland Brick, there will likely be only two brick manufacturers supplying WA, and so the proposed acquisition is unlikely to substantially lessen competition.

“In relation to the supply of masonry products, the ACCC concluded that the proposed acquisition was unlikely to result in a substantial lessening of competition in relation to those products.”

Mr Cooper said Midland Brick had a proud WA history spanning 75 years as one of WA’s most recognised and respected brand – as a result BGC would embrace that heritage and continue the Midland Brick trading name.

“This acquisition demonstrates BGC’s ongoing commitment to the Western Australian manufacturing and building sector at a time of unprecedented economic challenges, as a result of the uncertainty created by the pandemic,” Mr Cooper said.

“With combined operations, BGC is well positioned to ensure reliable and safe delivery of quality products for all customers throughout the building cycles, particularly to meet the demand driven by the COVID-19 stimulus.

“We are excited about the opportunities ahead for the brick and masonry paving businesses, and the ability to leverage the additional capabilities and strengths of the Midland Brick team.” 

Mr Cooper said BGC was focused on completing the transaction in early 2021 and looked forward to welcoming the Midland Brick employees to the BGC team.