CRH partners up with Filipino firm in €500m deal
A Filipino conglomerate is to invest almost €500m into a cement business after formalising a deal with Ireland's biggest firm CRH to buy the Philippine assets of French firm Lafarge.
The announcement came about two months after cement companies Holcim and Lafarge said CRH would buy some of their assets for €6.5bn when the two firms merged.
One of the conditions that is required of CRH to fulfil to complete the acquisition is that it must find a local partner for the Philippines asset, which is currently owned by Lafarge.
In May, Philippines-based Aboitiz Equity Ventures said it was looking to partner with CRH to buy Lafarge's assets in the Philippines as the local power-to-banking conglomerate sought to diversify into infrastructure.
Aboitiz has now announced that it plans to invest €484m after formalising its investment agreements with CRH that will see the two firms take over the Philippines assets.
It is estimated that the assets generate sales of about €400m a year and have an earnings margin of 30pc before deductions.
The transaction is expected to be completed within the second half of 2015, subject to conditions under the merger of Holcim and Lafarge and approval of the global sale of Lafarge assets.
It is not known how much CRH will invest in the assets or if it plans to invest at all. A spokeswoman for the Dublin-based building materials firm refused to comment.
The deal for CRH to acquire the assets of Switzerland-based Holcim and French firm Lafarge came about after the two companies announced that they were planning to merge, creating the world's biggest building materials business.
The companies had to agree to sell off a major chunk of their assets for the deal to get past competition authorities.
The merger was successfully completed last week, with the combined LafargeHolcim debuting on the Swiss and Paris stock exchanges with a market capitalisation of just under €40bn. The merged entity plans to complete the integration of the two companies by the end of next year.
The successful merger means that the €6.5bn asset sale to CRH is almost secure.
CRH is buying assets in regions such as Europe, Canada, Brazil and the Philippines.
The Irish firm will be propelled from being the world's fifth largest building materials company to being the third largest, just slightly behind French group Saint Gobain.