CRH eyes €2bn deal for US company

CRH eyes €2bn deal for US company
Published: 20 June 2006

CRH is in talks to buy the Ashland Paving and Construction (APAC) company in a deal that could cost up to €2 billion. The building materials group said its US-based subsidiary, Oldcastle Materials, had entered into an agreement which could lead to a takeover of Ashland.

"Completion of any transaction that might emerge from this process would be subject to US regulatory review and approval by the boards of directors of CRH and Ashland," the Irish firm said in a brief statement. APAC is a part of the Ashland group, one of America’s 500 largest companies.

APAC had sales of $2.8bn in the 12 months to end March last, with earnings before interest, tax, depreciation and amortisation (EBITDA) of around $200 million. It produces 32 million tons of aggregates and 32 million tons of asphalt annually.

APAC is based in Atlanta and has a spread of businesses across the southern US. CRH’s Oldcastle unit concentrates mainly on the north-east region. Last year, Oldcastle reported sales of $3.9bn and EBITDA of $613m.

Although neither side would disclose the terms of the offer, it is expected that CRH is likely to make a cash bid for APAC of around €1.5 to €2bn. A price tag in this region should not be too much of a worry for CRH. Last year, it spent some €1.45bn on acquisitions worldwide.

The spending has continued this year, with the takeover in April of MMI Products for $350m (€278m) adding to its US presence, where growth is returning and offsetting weak European construction markets.

CRH made pre-tax profits of €1.3bn last year on sales of €13.4bn. The takeover of APAC would be its largest deal for some time. The company’s attempts to expand in Europe have been stymied. It is fighting in the courts to retain ownership on to the 26 per cent stake it bought in Spanish cement firm Uniland late last year for €300m.