herald

Thursday 14 December 2017

CRH shares rise on back of €6.5bn deal

Materials

SHARES in CRH closed up around 7pc yesterday in London and Dublin after the building materials company said its €6.5bn deal to buy assets from rivals Lafarge and Holcim will lead to a wave of new acquisitions over the next 10 years.

CRH chief executive Albert Manifold said the company had been waiting for a decade for such a deal, which will see the firm become the world's third largest building materials supplier.

The transaction, which will see the company expand its global reach, involves the purchase of four specific businesses giving CRH expansion for growth. Analysts described the deal as strategically important and one that would provide CRH with new platforms for growth in both emerging and developed markets.

"CRH's management is delivering on its promise of recycling capital from businesses disposed of at high multiples into new operations at substantially lower valuations," said Davy analysts Barry Dixon and Robert Gardiner.

"It retains a strong balance sheet and will continue to generate significant free cash flow."

Robert Eason, analyst with Goodbody, which is providing financial advice to CRH on the assets being off loaded by Lafarge and Holcim, said it was a strategically important deal for the company.

"In addition, it provides the group with four strong platforms for future development," Mr Eason added.

CRH chief executive Albert Manifold said the company was buying four specific businesses with operations in Britain, France, Germany, central and Eastern Europe, the Philippines and Brazil.

"Quite frankly, we've been waiting a decade for a transaction such as this," Mr Manifold said.

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