CRH confirms talks to buy a stake in Indian cement maker Jaypee
Published 08/08/2012 | 05:00
CRH has confirmed its entry into negotiations to buy an equity stake in an Indian cement maker.
There's been speculation that the company could pay as much as €600m for a stake in operations owned by Jaiprakash Associates.
Its Jaypee Cement subsidiary owns three cement facilities in in the Indian state of Gujurat, in the west of the country, and another in Andhra Pradesh, in the south-east.
CRH said yesterday that the operations in Gujurat consist of so-called clinker plants with a total capacity of 3.6 million tonnes a year. There are also two cement grinding plants with a total annual capacity of 2.8 million tonnes.
"The completion of any transaction would be subject to satisfactory due diligence, the approval of the respective boards of directors and the granting of regulatory approval," said CRH.
Jaypee Cement is India's third-largest cement maker. The parent firm, Jaypee Group, has a string of other businesses and is involved in sectors such as hospitality, power and property.
CRH has made no secret of the fact that it's been keen to expand in India. Chief executive Myles Lee said at the group's AGM last May that the company was focused on opportunities in China and India in order to drive long-term growth.
CRH spent close to €250m on bolt-on acquisitions in the first half of this year. This included a further equity injection into its China associate Yatai Building Materials.
CRH owns 26pc of the Chinese firm.
Analyst Robert Gardiner at Davy Stockbrokers said that the price CRH is rumoured to be considering for a stake in the Indian business "looks steep". He added that any investment would need to "make sense" for CRH.
CRH first entered the Indian market in 2008 through a joint venture with My Home Industries, a cement maker in Andhra Pradesh.
Shares in CRH closed up 1.3pc in Dublin yesterday at €15.65.