Boral Buys Cement Giant Wagner to Spark Flotation Talk

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Boral Buys Cement Giant Wagner to Spark Flotation Talk - Mar 17 2011

THE $173 million sale by Wagner Group of its concrete division to Boral could pave the way for a multi-million-dollar listing of the Toowoomba-based construction and mining services company on the stock exchange.

Managing director Denis Wagner confirmed yesterday that his family company was continuing talks with local broking firm Wilson HTM about the possibility of a listing towards the end of 2012 - although he stressed that "no firm decision has been taken as yet".

A float is seen by the extended Wagner family as a succession planning tool, as well as a potential key to further expansion.

Boral chief executive Mark Selway said the purchase would improve his company's ability to tender for resource projects in the Darling Downs and Surat Basin regions of Queensland.

"Resource projects in the Darling Downs, particularly in oil and gas, have been a bit out of our reach because we haven't had the footprint on the ground to support those projects as well as we could," Mr Selway said.

"By bringing this into our portfolio, it offers a footprint right where the action is, so we are pleased about that.

"From a market share viewpoint, Wagners have currently got about 50 per cent of the aggregate or concrete share of the Darling Downs region and we have very little."

In the meantime, Wagners will devote the cash it gets from Boral to seize numerous growth opportunities opening up for the group's retained businesses.

These include a major projects division that is already providing quarrying, rock crushing and screening, plus transport services, for the infrastructure that will underpin coal seam gas-to-liquefied natural gas plants being built on Curtis Island off Gladstone.

Wagner will also be seeking more work in the mining industry where it has undertaken major contracts - including large rock and iron ore crushing operations in Western Australia - for, among other clients, China's CITIC group, which is developing the multi-billion-dollar Sino Iron project.

The deal with Boral is subject to Australian Competition and Consumer Commission approval.

Boral will buy Wagner's network of large fixed concrete plants and five of its quarries, its 60 per cent stake in a fly-ash joint venture and its concrete pumping and bulk transport operations.

All up, the operations generated revenue of $115 million last year.

Wagners will retain its cement grinding plant at Pinkenba in Brisbane - Queensland's only locally owned cement plant - and has signed a long-term supply contract with Boral to underpin the operation.

The quarries Wagner is selling include a long-life operation at Wellcamp Downs outside Toowoomba, a quarry near Jondaryan, one near Goondiwindi and another at Grantham in the Lockyer Valley.

Wagners, which entered a joint venture last year with Scotland's big oil and gas industry services business Wood Group, is actively pursuing opportunities to increase services to the resources sector, including the coal seam gas industry, and to the infrastructure sector.

"The sale does not include the Wagner's name and brand and the family will continue to operate the business under the Wagner's name," Mr Wagner said.

"Wagners will remain as one of Queensland's largest privately-owned construction and mining services companies.

"It will retain a significant business portfolio including cement, composite fibre technologies global projects and services, oil and gas services, reinforcing steel and precast concrete operations.

"Wagners will also continue to operate a projects business supplying on-site concrete, transport and contract aggregate crushing services and retain a very significant property portfolio."

About 250 of Wagner's 1000 staff are expected to transfer to Boral once the deal is finalised.

Tony Grant-Taylor From:The Courier-Mail April 16, 2011