Cemex given extension for divesture of US assets

Cemex given extension for divesture of US assets
Published: 23 November 2007


According to the US Department of Justice’s web-site, Cemex has being given a 21-day extension for it to divest of its 39 rmc, concrete block and aggregates facilities in Florida and Arizona, following its acquisition of Rinker. These are among a series of assets that CRH is currently in negotiations with Cemex on (split approximately 80% US and Europe 20%) and depending on the agreed deal the consideration range given by management was €2.5-3.2bn.

In a report issued on CRH last week (“Revised forecasts but valuation rock bottom”) Irish brokjers Goodbody estimated that such a deal could add at least 2-4% to its FY08/09 forecasts (based on very conservative assumptions of EV/EBITDA of 10x and synergies on acquired sales of c.1-2%).

Furthermore, despite the size of this deal, Goodbody believes CRH would still have the capacity on the balance sheet to do €3.5bn of deals (in addition to the €700m per annum it has already in its model) and leave EBITDA interest cover at 6x, which is management’s stated comfort level.