CRH has reached an agreement to sell its Americas Distribution business to Beacon Roofing Supply, Inc. for a total consideration of US$2.63 billion in cash. American Distribution has been part of the CRH Group for over 20 years and has historically executed a growth strategy based on focused acquisitions, selective greenfields, and investments in private label products. While the business has delivered significant improvement in performance and returns in recent years, the absence of value accretive acquisition opportunities and a lack of visibility as regards a route to market leadership, has resulted in CRH’s decision to divest the business at an attractive valuation. In 2016, Americas Distribution reported EBITDA of €150 million on sales of €2.3 billion; profit before tax for the year amounted to €121 million, and gross assets at H1 2017 amounted to €1.2 billion.
In accordance with the Group’s strategy, the proceeds from the divestment of Americas Distribution will be reallocated to value creating acquisitions and investments. In this context, CRH’s Europe Heavyside business has agreed to acquire Fels, a leading German lime and aggregates business, for €0.6 billion (EV). With nine production locations in Germany and one each in the Czech Republic and in the Moscow region of Russia, Fels has leading market positions in the lime markets in each of these areas and over 1 billion t of high quality limestone reserves. The Company has been a division of Xella International S.A. since 2001. CRH is a leading lime producer in the UK, Poland and Ireland with annual production volumes of 1.2 million t and sales of €180 million. The integration of Fels with CRH’s existing business will give CRH a number 2 position in the attractive European lime market while providing a platform for further growth. In 2016, Fels reported EBITDA of €70 million on sales of €260 million.
These transactions are in addition to the 1H17 development spend of €632 million on 13 acquisition/investment transactions, and disposal proceeds of €145 million, as reported in CRH’s 2017 Interim Results announcement today. The planned divestment of one cement plant and one grinding station in Germany, as announced by CRH on 1 March 2017, has not yet been completed and remains subject to review by the German Competition Authority.
Commenting on these developments, Albert Manifold, CRH Chief Executive, said: “These transactions announced today demonstrate the execution of CRH’s strategy of adding value through the efficient allocation and reallocation of capital, and in particular the deployment of capital into an attractive growth market in Europe, while maintaining our financial discipline. We are pleased that our Americas Distribution business is being acquired by a highly respected industry player and we wish our colleagues every success as they enter this new phase of their development. At the same time we see significant value creation potential from the Fels acquisition announced today, which will also be an exciting new development platform for CRH.”
Read the article online at: https://www.worldcement.com/europe-cis/24082017/crh-announces-divestment/