Adelaide based cementer Adbri (ASX:ABC) has signed off on its deal to acquire the sand operations of Metro Quarry Group (MQG) in a 50/50 joint venture with Barro Group.
MQG operates two quarries in Victoria at Lang Lang and Nyora, supplying the local and Melbourne markets with natural sand. The joint venture is named under the Independent Cement and Lime Ltd, comprising Adbri and Barro, manufacturing cement and concrete based products as well as quarry products Australia wide.
Adbri will initially inject $30 million into the newly established joint venture entity to fund its share of the purchase and working capital. The transaction is expected to complete in November this year.
“This acquisition is consistent with our strategy to extend our vertically integrated footprint and provides a compelling opportunity for Adbri to lock in a long-term secure supply of natural sand for our downstream businesses servicing the competitive Melbourne market,” said Adbri chief executive officer, Nick Miller.
“The value of this purchase will be optimised through a joint ownership structure, where the operational expertise of Adbri and the Barro Group will unlock cost efficiencies and maximise product off take,” he continued.
Shares in Adbri (ASX:ABC) are trading 1.6 per cent lower at $3.18.