Sources: U.S. Department of Justice, Antitrust Division; CP staff
The Justice Department Antitrust Division calls for General Shale Brick and Meridian Brick LLC to divest three plants, 14 showrooms and distribution yards, plus six mines in a proposed settlement of an antitrust lawsuit challenging the producers’ merger. The agency filed the settlement and suit-triggering complaint in the U.S. District Court for the District of Columbia, contending the action is aimed at keeping competition for residential brick in Southern and Midwestern markets.
Johnson City, Tenn.-based General Shale announced a $250 million offer for Meridian Brick, Alpharetta, Ga. in late 2020. The complaint notes that the producers generated more than $750 million combined in 2020 sales, primarily from clay units, and are top residential brick players in eight markets spanning Alabama, Indiana, Kentucky, Michigan, Ohio and Tennessee. The General Shale assets in the settlement are a brick production facility, Edwards Mine, and distribution yard, all in Mooresville, Ind.; and, distribution yards in Evansville, Ind., plus Sterling Heights and Whitmore Lake, Mich. The Meridian assets are a brick production facility, Collins and Rich Mines and distribution yard, all Gleason, Tenn.; brick production facility and Vulcan Mine, Bessemer, Ala.; Centreville Mine, Brent, Ala.; lease agreement for Wingo Mine, Hickman, N.Y.; and, distribution yards in Florence and Huntsville, Ala., Clarksville, Knoxville, Memphis and Nashville (Macon Rd. and Centennial Place), Tenn., plus Tupelo, Miss.; and, Pelham Town Center Store, Pelham, Ala.
“Residential brick is an essential building block in American home construction,” says Antitrust Division Acting Assistant Attorney General Richard Powers. “As originally proposed, the transaction would have led to higher priced and lower quality residential brick, making it more expensive for millions to build and purchase homes. The settlement preserves competition for the manufacture and sale of residential brick to the benefit of American homebuilders and homebuyers.”
In their complaint, he and colleagues elaborate on clay masonry market dynamics: “Not only has competition between General Shale and Meridian driven residential brick prices down, it has also fostered product innovation that has resulted in new products and the broad portfolio that each firm offers today. Competition between these firms has resulted in the introduction of new color mixes, textures, and facing styles, as well as more efficient and environmentally sustainable production processes.”
The agency’s proposed settlement for the General Shale-Meridian tie up names Columbia, S.C.-based investor RemSom LLC as a prospective asset package suitor, while allowing the parties to identify an alternate buyer subject to DOJ and District Court approval. RemSom became the majority shareholder of US Brick LLC, formerly known as Carolina Brick, in 2020. US Brick produces commercial and residential masonry units and is represented in 30 states. The Antitrust Division will open the settlement and competitive impact statement to public comment by way of the Federal Register. At the conclusion of a 60-day comment period, the U.S. District Court may enter the final judgment upon finding the settlement is in the public interest.
Court approval will ease a transaction positioning Wienerberger AG, General Shale’s Austrian parent, as a more dominant player in North American clay brick production and distribution. Deal closing will likewise sunset the masonry market participation of the partners who formed Meridian Brick in 2016 as a 50/50 joint venture: Australia’s Boral Ltd., presently shopping its last North American asset, fly ash leader Boral Resources; and, LSF9 Stardust Super Holdings L.P., a fund affiliated with Texas’ Lone Star Partners, which inherited brick assets under Hanson Building Products America in a 2015 deal with HeidelbergCement AG.