Knauf calls in the bankers as Aus building materials sector in play

German building materials giant Knauf is thinking about throwing its Australian assets into a wider industry shake-up and is preparing to consider options, including a merger or sale to another trade player or private equity firm.

As building materials groups around the country work to map out their futures, Knauf has called in the bankers to assess options for its own piece of the puzzle, which includes insulation, plasterboard and ceilings.

It is understood Knauf has sent a request for a proposal to a handful of Australian investment banking teams, asking them for ideas on where its own assets could fit into the wider picture and what they may be worth. It's expected to pick one (or more) for counsel.

Sources reckon Knauf could be a seller at the right price or be involved in consolidation in another capacity, although the review is said to be in its early stages.

Analysts reckon Knauf makes about $40 million a year at the EBITDA line in Australia across its three main divisions; Knauf Insulation, Knauf AMP and Knauf Australia, which supplies lightweight materials for walls, kitchens and the like.

Knauf is best known among local dealmakers as Boral's joint venture partner. Knauf acquired American group USG Corporation last year, and inherited USG's stake in a regional plasterboard joint venture with Boral.

Knauf and USG-Boral were competitors in the local plasterboard and suspended ceilings markets, and Knauf's USG takeover paved the way for Boral to buy back the Australian joint venture.

After months of talks, Boral agreed on a deal to take full ownership of USG Boral Australia and New Zealand, and tip some of its assets into an expanded 50-50 joint venture with Knauf in Asia.

However, Boral reneged just recently after deciding the ACCC was unlikely to approve of the Australia/New Zealand component. Boral, which has Macquarie Capital and Flagstaff Partners helping with its own strategic review, and Knauf are back in talks.

Knauf's review is expected to consider the company's relationship with Boral and whether it's time, effort and capital may be better spent in other parts of the world.

It also comes as West Australian building products bigwig BGC Group, part of what was the Buckeridge family empire, tries to time its own sale. Macquarie's bankers are also in BGC's camp.

Meanwhile, ADBRI (which changed its name from Adelaide Brighton last week), is getting used to life under the watch of 43 per cent shareholder Barro, which is a big building materials player in its own right. Barro's Raymond Barro took over as ADBRI chairman last year and it's another situation that's been keeping bankers busy.

And of course, Fletcher Building seems to jump from one organisational restructure to the next. Its most recent "reset" was announced a fortnight ago and would result in about a 10 per cent reduction in its workforce.

So it's fair to say there are bankers crawling all over the major players – and now Knauf's joining the party.