BGC Australia has reached an agreement with the consortium that acquired Midland Brick last year to buy the brand and its manufacturing operations.
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 to create Hesperia) and CFC Group subsidiary Birchmead.
At the time, the consortium said it had recognised big property development opportunities using Midland Brick’s land holdings; assets that comprise about 800 hectares of land in Middle Swan, Muchea and Bullsbrook.
A portion of the land was already zoned residential, with the majority earmarked for industrial development.
The brickmaking factory, located on 83ha of land along Reid Highway, Great Northern Highway and the Swan River, was retained post-completion of the sale.
In a statement issued today, the consortium said the proposed sale to BGC followed a review it had conducted of Midland Brick’s operating environment, in light of the substantial economic changes that had occurred since the acquisition was announced in late 2019.
“The consortium’s expertise and experience is in land development and, as a result, it intends to focus on redevelopment of those areas of the Midland Brick site in Middle Swan that will no longer be required for brickmaking, masonry paving and associated operations,” it said in the statement.
“A new subdivision proposal for the southern part of the site, which has been the long-term intention for the area of the site bordering Viveash, was recently approved by the WA Planning Commission.
“The consortium believes substantial changes in future economic conditions that have occurred during 2020 and beyond mean it has become too commercially difficult for it to successfully operate a brick and masonry manufacturer over the longer term.”
The acquisition is an interesting move for BGC, given its recent divestment strategy, which followed the passing of the company’s founder, the late Len Buckeridge, in 2014.
This included the sale of BGC Contracting in November 2019, which NRW Holdings purchased for $116.4 million, as well as the sale of property assets as recent as last month, with Mineral Resources purchasing BGC’s office building on Walters Drive in Herdsman for $60.5 million.
Mr Cooper said while the group had identified its non-core businesses and non-core properties and had been progressively divesting, equally BGC had identified its core businesses.
BGC Fibre Cement and BGC Plasterboard businesses were also put on the market, but Mr Cooper said they had since been pulled back in as part of the group’s vertically integrated building and materials business, which had been recognised as a core business.
“We’ve got a very clear strategy on strengthening and improving that,” Mr Cooper told Business News.
“A lot of that we’ve been doing already but it probably hasn’t hit the news as much.”
Mr Cooper said that investment involved relocating the residential business from eight offices into a purpose built-centre in Osborne Park, as well as investing in a large cement depot in Kalgoorlie.
“This opportunity became available to further invest in the brick business going forward,” he said.
“This decision 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.
“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.”
The acquisition is subject to a number of regulatory conditions considered customary in this type of transaction, with the Midland Brick workforce to transition to employment with BGC as part of the sale.
Mr Cooper said BGC was hoping to be given confirmation by Christmas.
The acquisition will add to BGC’s existing Building Products and Services division, which includes Brikmakers, Harmony Roof Tiles, GTEK Plasterboard and more.
Midland Brick is one of WA’s most recognised and respected brands, backed by a 75-year history.
BGC plans to embrace that brand heritage and continue the Midland Brick trading name.
“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.