CRH considers €676m sale of US distribution unit
CRH could be considering the sale of a US unit for as much as $1bn (€676m), reports said yesterday.
The Irish Independent reported that CRH is considering the sale of Allied Building Products which accounts for about seven per cent of group sales, according to Mergermarket.com which tracks mergers and acquisitions.
The New Jersey-based distribution business had earnings before interest and taxes last year of $55m on sales of $1.8bn. Such a sale could raise between €730m and €1.1bn for CRH, Goodbody Stockbroker analyst Robert Eason said in a note yesterday. "
Overall, such a deal could make sense providing CRH gets a price that reflects mid-cycle margins and not trough margins," he said. "It potentially brings to the fore the valuation conundrum that CRH’s share price has faced for many a year, that is, it tends to trade at a discount to the sum-of-the-parts.
" Profit at the unit fell by almost two-thirds this year compared with last year as the recession bit into CRH’s US operations which account for more than half of profits at Ireland’s biggest company by market value.
CRH bought the building materials company for $121m in cash more than ten years ago. The acquisition included the assumption of an undisclosed amount of debt and deferred payments.
A sale would leave CRH well placed to spend up to €5bn on acquisitions. Published under Cement News
