CRH ’could face a €5bn takeover bid’

CRH ’could face a €5bn takeover bid’
Published: 20 June 2005

CRH could be "vulnerable" to a takeover bid, according to its stockbroker Davy, which feels that €8 a share is not out of the question. 

Such a price would represent a 27pc premium over yesterday’s closing value of EUR2.10, valuing the international building materials group at EUR5bn. A bid coming in for CRH at that level would easily eclipse previous Irish takeover records. 

The broker wrote to clients last Tuesday arguing how the CRH share price had been left behind in a sector that has been driven upwards by corporate activity. "It is striking that CRH has not participated in the run-up in sector share prices since the Cemex/RMC deal last September," Ronan Hurley, director Davy Irish Equities, said. 

Since then, there have been two further deals of note. Aggregate Industries was acquired earlier this year by Holcim, while HeidelbergCement now looks to be changing hands. 

Even though CRH would represent a bigger deal still, Mr Hurley concedes that Ireland’s third-largest company "now looks to be within range of a predator". 

Cemex, have already geared themselves up, he suggests "a trade bid would be unlikely". Davy suggests that an approach, should one emerge, was more likely to come from a large private equity player, while a consortium could not be ruled out. 

Davy calculates that, based on a bid coming in at EUR8 a share, the enterprise value multiple would work out at just more than nine times or "broadly in line" with the price paid for Aggregate and expected valuation for Heidelberg.