Risks Loom as Big River Raises $10m to Acquire John’s Building Supplies

Strategic Expansion in Western Australia

Big River Industries Ltd (ASX – BRI) has announced its intention to acquire John’s Building Supplies (JBS), a well-established building products distributor based in Welshpool, Western Australia. Founded in 1982, JBS has built a solid reputation servicing over 800 active trade customers across residential, commercial, and industrial sectors. This acquisition marks a significant step for Big River to deepen its footprint in the WA market, particularly enhancing its capabilities in interiors and cladding.

The deal, valued at up to $17 million, comprises $13 million in upfront cash, $2 million in scrip shares, and an earnout of up to $2 million contingent on EBITDA performance over 18 months. The transaction is expected to complete by mid-December 2025, with John Lindsay, the current owner, and key management personnel remaining with the business to ensure continuity.

Financial Upside and Funding Structure

John’s Building Supplies has demonstrated consistent profitability, with a three-year average revenue of $41.2 million and EBITDA of $5.2 million. On a pro forma basis, the acquisition is forecast to deliver approximately 41% earnings per share (EPS) accretion to Big River before considering synergies and significant items. This immediate uplift is notable given the current market conditions.

Funding for the acquisition will be primarily sourced through a fully underwritten renounceable entitlement offer aiming to raise around $10 million, supplemented by $2 million in scrip shares and existing bank facilities. The entitlement offer is priced at $1.37 per share, representing a slight premium to recent trading prices, and has garnered strong support from directors and major shareholders, who have committed to participate fully.

Market Context and Growth Prospects

Big River’s recent trading update reveals a modest 3.2% revenue decline year-to-date through October 2025 compared to the prior year, an improvement from earlier in the year. While residential demand remains soft in some regions such as New South Wales and Victoria, Western Australia and Queensland continue to perform well, with commercial activity showing signs of recovery.

The acquisition of JBS provides Big River with a platform to cross-sell its manufactured products and diversify its customer base. The company highlights growth opportunities in differentiated, higher-margin product categories like bespoke panels and lightweight cladding. The strategic rationale emphasizes the acquisition’s alignment with Big River’s capital allocation priorities and its potential to strengthen supplier relationships and operational efficiencies.

Risks and Integration Challenges

Despite the promising outlook, the acquisition carries typical risks including completion conditions, integration challenges, and reliance on key personnel retention. The financials for John’s Building Supplies are unaudited, and the success of realizing synergies remains to be proven. Additionally, the equity raising introduces dilution risk for existing shareholders who do not participate fully.

Big River has disclosed comprehensive risk factors, ranging from market cyclicality and operational risks to regulatory and cyber security concerns. The company’s underwriting agreement for the entitlement offer includes termination rights linked to market and regulatory developments, underscoring the cautious approach taken.

Looking Ahead

With the acquisition scheduled for completion in mid-December and the equity raising underway, Big River Industries is positioning itself for enhanced scale and profitability in a competitive building products market. Investors will be watching closely to see how the integration unfolds and whether the anticipated earnings accretion materializes amid evolving market conditions.