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Investments and acquisitions by CRH

World Cement,

CRH plc, the international building materials group, has announced 21 acquisition and investment initiatives totalling approximately €0.2 billion undertaken during the first-half of 2011 as part of its continuing programme of development activity.

The development initiatives included in this Update are as follows:

  • Europe Materials: one acquisition, two investments - €40 million
  • Europe Products & Distribution: four acquisitions, one investment - €20 million
  • Americas Materials: seven acquisitions, two investments - €98 million (US$137 million)
  • Americas Products & Distribution: four acquisitions - €28 million (US$40 million)

The Group also announces that its Europe Materials Division has reached agreement to acquire the family owned VVM Group of businesses, which operates two cement grinding mills with a combined capacity of 1.5 million t in Belgium and two ready-mixed concrete plants in Belgium and France. Completion of the transaction, which is subject to the granting of the required regulatory approvals, would bring cumulative development spend for the Group to approximately €0.3 billion.

Commenting on these developments, Myles Lee, CRH Chief Executive, said:

“The first six months of 2011 saw development activity continue across all six operating segments, strengthening our existing market positions and adding valuable and well-located aggregates reserves. The VVM transaction, which is subject to regulatory approval, represents an important strategic opportunity for our existing Cementbouw cement trading and ready-mixed concrete business in the Benelux, while also complementing our Products businesses in the region. The pipeline of potential acquisitions remains good, and with our strong balance sheet we have the capacity, where we see value, to capitalise on these opportunities.

The Group’s proactive approach to portfolio management was reflected in the completion of a number of divestments which generated proceeds for reinvestment of approximately €345 million in the first half of 2011.”

Europe Materials: €40 million

The Europe Materials Division completed transactions in Portugal and Ukraine whilst increasing its holding in a subsidiary in Poland during the first half of 2011 at a total cost of €40 million and adding €36 million of annualised incremental sales.

In June, Secil, CRH’s joint venture in Portugal, acquired Lafarge’s Portuguese aggregates and ready-mixed concrete business comprising 30 ready-mixed concrete plants, four quarries and aggregates reserves of 56 million t. This acquisition strengthens Secil’s market positions across the country, expanding in-house aggregates and cement consumption in addition to yielding significant operational leverage and cost savings.

Ukraine, Poland
Lviv Beton, a precast and ready-mixed concrete producer with 0.5 million t of aggregates reserves in Lviv, Ukraine, was acquired in June, and reflects CRH’s strategy of focussing expansion initiatives in large urban markets.

During the period, CRH also increased its investment in Grupa Silikaty, Poland’s second largest producer of sandlime brick, increasing the Group’s shareholding from 75% to 90%.

Europe Products & Distribution: €20 million

Europe Products completed three transactions during the first half of 2011 within its Concrete (1) and Building Products (2) business, while Europe Distribution extended its branch network through an acquisition in Belgium and investment in France. Combined annualised sales from these acquisitions amount to €24 million.

Americas Materials: €98 million (US$137 million)

The Americas Materials Division completed nine acquisitions and investments during the first half of 2011 at a combined cost of US$137 million (€98 million), giving rise to incremental annualised sales of US$56 million and strengthening its aggregates position through the addition of approximately 284 million t (CRH share) of reserves.

Americas Products & Distribution: €28 million (US$40 million)

The Americas Products & Distribution Division completed four bolt-on transactions during the first-half of 2011 at a combined cost of US$40 million (€28 million). Incremental annualised sales resulting from the acquisitions total US$43 million.

Divestment Update

The first half of 2011 saw completion of the previously announced Insulation and Climate Control divestments together with the disposal of CRH’s 35% associate investment in the Trialis distribution business in France. Total proceeds from these completed disposals amount to approximately €345 million. Combined sales recorded in 2010 for the Insulation and Climate Control businesses were approximately €440 million; combined sales for these businesses recognised pre-divestment in 2011 were in the region of €100 million.

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