CSR and Boral will look to combine their east coast brick operations to form a joint venture, pending approval from the consumer watchdog.
The JV will be 60% owned by CSR and 40 per cent by Boral, but neither party will pay a cash consideration up front.
Initial overhead savings of $7 million to $10 million are expected following the integration of the businesses, which have a combined revenue of $230 million.
The companies will look to consolidate manufacturing sites to lower per unit production costs and develop high value land assets.
Total brick production has fallen 46 per cent in Australia from its peak in 1981, despite a general increase in construction activity over the period.
"The Australian cladding industry has faced major changes in demand over the past 30 years resulting in a significant reduction in brick use," Boral chief executive and managing director Mike Kane said.
The combined venture will include 12 operations across Australia's east coast and have a capacity of approximately 600 million bricks.
Scoresby's Boral-owned site and the Schofields site owned by CSR will be excluded from the JV.
The proposed joint venture comes two days after CSR announced it would acquire AFS Products, as it seeks to broaden its building products offering.