CRH under-valued?

CRH under-valued?
Published: 21 May 2007


After climbing to a handsome high of Euro 36.30 earlier this month largely on the back of widespread rumours of buying by Irish entrepreneurs John Magnier and JP McManus the CRH share price has since fallen back a couple of euro, and in fact ended the week trading at 34.33. This weakening in the CRH share price has occurred despite the very full price recently paid by German company HeidelbergCement for Hanson, the British building materials outfit.

Heidelberg is buying into Britain at stg11 per share, that’s a total of UK£8bn for Hanson. Add in Hanson’s net debt of UK£1.4bn and that gives us a total price of UK£9.4bn which the German’s are paying. That translates into purchase price multiple of 16.7 times operating (pre-interest) profits. If the same multiple were applied to CRH, it would translate into a share price of about Euro 46 – says the Irish Times.