Shares in the building supplies company are buoyant on divestment news…
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Boral has formally sold its North American building products business for US$2.15 billion. It has also offloaded its Australian timber business for $64.5 million.
The company also noted its ongoing divestment plan might result in it returning up to $3 billion of capital to shareholders.
While the news is marked as non-price sensitive, the market’s boosting Boral’s stock higher this morning.
At the time of writing, the Boral share price is $6.085, 1.93% higher than its previous close.
Let’s take a closer look at today’s announcement from the building and construction products supplier.
Boral completes significant divestments
The Boral share price is gaining this morning despite no price sensitive news having been released by the company.
However, this morning it announced the completion of 2 significant divestments.
The company has officially sold its North American building products business to Westlake Chemical Corporation for a cool US$2.15 billion.
Additionally, the Pentarch Group has formally taken over Boral’s Australian timber business.
The Boral share price temporarily dipped when it announced its plan to sell the timber business in July.
The funds from the sales will be put towards reducing Boral’s debt. It is targeting a bottom end net debt range of between $900 million and $1.1 billion.
Boral also expects the cash, alongside an expected US$125 million from its planned divestment of Meridian Brick, to allow it to return as much as $3 billion of capital to shareholders.
It plans to do so through an equal capital reduction. Though, it will need approval from shareholders and the Australian Taxation Office before its plan can go ahead.
Commentary from management
Boral’s CEO and managing director Zlatko Todorcevski commented on the divestments:
Completion of these strategic divestments is unlocking significant value for Boral’s shareholders.
We have now reached an important milestone in re-positioning Boral as a focused construction materials company in Australia…
Fly Ash in North America is the final business in the portfolio that we intend to divest and we continue to progress divestment opportunities.
Boral share price snapshot
Boral’s stock has been performing well on the ASX lately.
It is currently trading for 22% more than it was at the start of 2021. Its value has also increased by 32% since this time last year.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.