CRH ponders Israeli option

CRH ponders Israeli option
Published: 23 December 2003

Talks are currently under way with Clal Industries, the diverse Israeli holding company that has a controlling 75 per cent stake in Mashav, in relation to an option CRH holds that wouldallow it acquire the additional 25 per cent shareholding. In August 2001, CRH acquired 25 per cent of Mashav, and was granted an option over a further 25 per cent that had to be exercised by the end of this year. That option is non-transferable -CRH either activates it or it dies.  The attraction Mashav holds for CRH is its subsidiary, Nesher Cement, the monopoly cement producer in Israel. The company is understood to be quite profitable, although profitability may have been affected by the unrest which has intensified in the region in recent years.  Indeed, reports at the time of the first transaction indicated that CRH had originally intended to take a 50 per cent stake straight off before the end of 2000, but was dissuaded by the intefada then under way.  When it did come to do the deal almost a year later, it only opted to buy an initial 25 per cent and framed the deal so that only one-third of the US$145m (€164m) consideration was inthe form of equity. The remaining two-thirds (US$97m) took the shape of non-recoursepreference shares.  It is unclear how much CRH will have to pay if it goes ahead and exercises the option. If the deal is dollar-denominated, then this will work in the group's favour, given the strength of the euro. Nesher has controlled the cement industry in Israel ever since it opened its doors in 1925, importing enough to make up for the annual shortfall in output from its ownplant.