We issued a buy rec at $5.00 on Boral following their recent announcement to acquire Headwater in the US.
Boral will raise $1.6bn via a fully underwritten pro-rata accelerated renounceable entitlement offer, $450m via a fully underwritten placement and the remainder through cash and debt. The placement is part of an overall $2bn+ equity raising to fund the $3.5b acquisition of Headwaters
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FY17 PE is 13.5x and assuming EBITDA of $670m we have the stock on a forward yield of 4%.
To help mange the risk we use call options to achieve our target exit price.
