23/08/2019 - 08:30

Fini Group, Linc Property lead consortium to buy Midland Brick

23/08/2019 - 08:30

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Midland Brick is coming back into Western Australian ownership, with a consortium featuring Fini Group, Linc Property and Birchmead acquiring the brickmaker from ASX-listed building products supplier Boral for $86 million.

Fini Group, Linc Property lead consortium to buy Midland Brick

Midland Brick is coming back into Western Australian ownership, with a consortium featuring Fini Group, Linc Property and Birchmead acquiring the brickmaker from ASX-listed building products supplier Boral for $86 million. 

The sale is subject to several conditions but is expected to be complete by the end of the year.

With Midland Brick's assets comprising around 800 hectares of land in Middle Swan, Muchea and Bullsbrook, the consortium is expected to leverage the residential expertise of Fini Group and industrial estate experience of Linc Property and Birchmead (part of the diversified industrial conglomerate CFC Group) to create large-scale development opportunities.

A portion of the land is already zoned residential, with the majority earmarked for industrial development.

Development will progress in a staged manner, with the consortium to seek amendments to current zoning to allow for more residential development. First lots could be available in as soon as 12 to 18 months, most likely for residential development.

The brickmaking factory, located on 83ha of land along Reid Highway, Great Northern Highway and the Swan River, will be retained post-completion of the sale.

Midland Brick's Swan Valley facility (background) has long been thought of as having prime residential and industrial development potential. Photo: Gabriel Oliveira

Brickmaking operations will be consolidated to the northern part of the site, with the riverfront portions of the site to be redeveloped into a residential estate, and industrial facilities to be built around the brick factory.

Fini Group and Linc Property have a long-running working relationship, to the extent that the firms share a Subiaco office, while the companies linked up with CFC Group through the Tonkin Highway Industrial Estate.

Consortium spokesperson Judd Dyer said there would be no change to Midland Brick’s product lines, and believed there would be strong demand for its products.

Midland Brick senior management will remain in place, with employees being briefed about the sale today.

“The consortium is developing operational and consolidation plans to be implemented following completion of the sale,” Mr Dyer said.

Law firm Squire Patton Boggs provided advisory services to the consortium.

Boral chief executive Mike Kane said the sale was consistent with the group’s strategy of focusing on construction materials and reducing exposure to bricks.

“We have owned and operated Midland Brick for close to 30 years and we recognise and value the contribution the business has made to the Boral Group over that time,” he said.

“We also recognise the iconic and much-loved position that the Midland Brick company has had in WA for 73 years.

“We are confident that this change of ownership will strengthen Midland Brick’s prospects for the future.”

Boral intends to use proceeds from the sale to reduce its debt and fund strategic growth opportunities.

Midland Brick has been operating in WA for more than 70 years, having been established by brothers Ric and Gerry New in 1945.

By the late 1980s, Midland Brick was producing more than 1 million bricks per day, recording sales of more than $100 million annually.

Gerry New sold the business to Boral in 1989 following his brother’s passing.

In recent years Midland Brick has provided challenges for Boral, particularly as activity has steadily declined in WA’s residential construction sector.

In 2017, Midland Brick shut down one of its WA manufacturing facilities and slashed 1,000 jobs following a 34 per cent plunge in sales compared to the previous financial year.

A possible sale had been on the cards for some time, with national building products manufacturer CSR running its ruler over the business in 2013.

Boral said in its 2017-18 annual report that its sales volumes were down 11 per cent on the previous year, with its Bricks WA division performing above break-even despite challenging conditions in WA construction.

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