CRH wins the opening Uniland round

CRH wins the opening Uniland round
Published: 27 June 2006

CRH appears to have won the opening round in its court battle with the board of Corporacion Uniland, the Catalan cement group 26.3pc owned by the Irish building materials giant.  The Commercial Court of Barcelona yesterday confirmed the validity of CRH’s ownership of 22.4 per cent of the shares in the Barcelona based Uniland.  These shares represented the sole assets of three former Uniland subsidiaries acquired by CRH towards the end of 2005. 
 
The registration of the balance of 3.9 per cent, subsequently acquired by CRH, is now expected to follow, confirming CRH as controlling 26.3 per cent of the Uniland shares. CRH paid circa euro 300m for this stake, but more recently Cementos Portland Valderrivas (CPV), a subsidiary of Spanish group FCC, announced an agreement to buy a controlling 51 per cent of Uniland, Cataluna’s largest cement company, for Euro 1.09bn. 

That deal values Uniland at €2.1bn and by extension CRH’s stake at Euro 560m, or significantly more than it paid to acquire the shares.  CRH’s legal action to have the proposed sale of Uniland shares to CPV declared null and void continues, as the Irish group also seeks to have its pre-emption rights on those shares confirmed. 
 
The Uniland constitution seemingly gives existing shareholders the right of first refusal in the event of stock being offered for sale.  CRH was excluded from the bid process that resulted in CPV’s offer, hence its recourse to the courts. 
 
But by the same token, Uniland is arguing that the stock CRH bought from the three holding companies should also have been offered to existing investors first and it is asking the court to confirm as much. 
 
It is unclear what CRH will do. Even if it wins court support and is able to block the CPV purchase, it may not now wish to proceed to buy ownership of Uniland given that shareholders’ expectations of the price have now been bid so high by CPV’s intervention. 
 
CPV can afford to pay up because integrating Uniland is expected to save it over €20m per year through synergies from the second year onwards.  CRH may prefer to sell its 26.3 per cent stake and invest its profit (some euro 260m in just six months) in the US.  CRH is now assessing its options and it is currently looking at buying Ashland Paving for $1.5bn in what would be its largest corporate deal ever. (Irish Independent report).