Fight over cement for Wagners
Company suspends Boral agreement
THE price of shares in Toowoomba company Wagners hit record lows after the company revealed it had suspended supplying cement to competitor Boral over a pricing dispute.
Wagners, a major construction materials company, released a statement to the ASX, revealing it had received a notice from Boral regarding the price of cement.
The pricing notice suggested Boral had received a better offer from a “long-established supplier of cement within south-east Queensland”.
‘‘ THE STEPS WE’VE TAKEN ARE THE RIGHT STEPS FOR THE COMPANY AND THE SHAREHOLDERS.
CAMERON COLEMAN
THE chief executive of Toowoomba company Wagners has defended the decision to suspend selling cement products to competitor Boral over a price dispute.
Wagners Holding Company revealed to shareholders this week it would suspend its current agreement with Boral, after the latter revealed it had received a better offer for cement from a third party.
That offer, made by a company with history of selling in south-east Queensland, has been disputed by Wagners as “not bona fide”.
The decision to suspend the agreement caused a massive sell-off of Wagners shares on Tuesday, with the price dropping to a record low of $2.31 as of yesterday.
But CEO Cameron Coleman said the move was the best deal for the company’s shareholders, adding there were several issues with the pricing notice issued by Boral.
“The steps we’ve taken are the right steps for the company, shareholders and the longterm future of both,” he said.
“There are a number of reasons (why this offer is invalid), of which I can’t elaborate on (as) I’m bound by confidentiality reasons.
“It is a significant step but it is the right step.”
In the ASX statement, Wagners put the profit reduction from a full six-month suspension at about $20 million.
“The company has commenced a formal process disputing the validity of the pricing notice on the basis it has concerns regarding the bona fide nature of the market pricing evidence provided and therefore the contractual basis upon which the notice has been issued,” the release said.
“The company has made an election under the agreement to suspend supply of cement products to Boral, pending resolution, or determination by the courts, of the dispute regarding the validity of the pricing notice.”
Both Wagners and Boral are highly active in Queensland and Australia with construction materials, particularly in the field of carbon-friendly concrete.
Just last week, Boral revealed it had released its environmentally-friendly Envisia product to the Darling Downs to compete with Wagners’ Earth-Friendly Concrete.
A spokeswoman for Boral said the company was confident the suspension wouldn’t affect supplies.
“We are currently working through a process provided for in the cement supply agreement with Wagners that ensures we are sourcing cement at competitive rates,” she said.
“We have continuity of supply and we don’t anticipate any disruption to our operations.”