CRH strikes deal to acquire €6.5bn Holcim and Lafarge assets

CRH strikes deal to acquire €6.5bn Holcim and Lafarge assets
02 February 2015

CRH has reached a deal to acquire €6.5bn in the assets of Lafarge and Holcim who are restructuring to win regulatory approval for their planned merger. The deal will significantly expand CRH’s globally footprint in the cement industry by acquiring new facilities in the Philippines, Canada, Brazil and several countries in Europe.

Commenting on the acquisitions, CRH chief executive Albert Manifold said: “This transaction represents a significant value creation opportunity for CRH. We are acquiring a quality portfolio of assets, which complement our existing positions, at an attractive valuation and at the right point of the cycle. The acquisition strengthens our presence in important markets across North America, Western, Central and Eastern Europe as well as providing new platforms for growth in emerging markets.

"The assets will integrate well into existing CRH networks benefiting from our strong business-building capabilities while providing an important platform for future development opportunities. We have ma intained our disciplined investment approach through our continued focus on capital efficiency and remain focused on bringing returns back to peak during this cycle.”

The divestments are subject to the completion of the merger, including a successful public exchange offering and approval by Holcim’s shareholders in the second quarter of 2015.

CRH, which has a market capitalisation of €15.8bn, plans to finance the purchase with a combination of cash from its balance sheet, new debt and an equity placement equivalent to 9.99 per cent of shares, it said in a statement on Sunday. For CRH, the asset purchase is by far the biggest deal it has ever undertaken. Although it has expanded by acquisition for the past several decades, these have tended to be smaller transactions. It has spent $24bn on roughly 650 acquisitions since 2000.

"The projected transaction is a key step towards the creation of LafargeHolcim and the value offered reflects the strong quality of the selected assets. This successful outcome demonstrates the quality of the collaborative work undertaken by Holcim and Lafarge teams. With this announcement, we remain firmly on track to complete our proposed merger in the first half of 2015", commented Wolfgang Reitzle, designated Chairman of the Board of Directors of LafargeHolcim and Bruno Lafont, designated CEO of the future combined company.

During an auction process that lasted months, CRH beat a consortium bid from buyout groups Blackstone and Cinven as well as Canada Pension Plan Investment Board.

The portfolio of building materials assets to be acquired from either Lafarge or Holcim span four regional platforms:

North America
• All of Holcim's assets in Canada, plus six US cement terminals and the Trident cement plant in
Montana, US.

Western Europe
• All of Lafarge's assets in the UK (post the acquisition by Lafarge of the remaining 50 per cent of the Lafarge UK
joint venture) except for the Cauldon cement plant and related assets.
• All of Lafarge's assets in Germany.
• All of Holcim's assets in France, except for the Altkirch plant and associated assets in the 'Haut-Rhin' region, all of Lafarge’s assets in La Reunion (except its minority shareholding in Ciments de Bourbon) and the Saint Nazaire Lafarge grinding station.

Central and Eastern Europe
• All of Holcim's assets in Slovakia and Serbia, and all operating assets in Hungary
• All of Lafarge’s assets in Romania.

Emerging markets
• The assets of Lafarge Republic, Inc in the Philippines, except certain assets including the Iligan and Mindanao cement plants
• Certain cement assets from Lafarge and Holcim's Brazilian footprint.

Published under Cement News