Jump in CRH shares after US group boosts stake to 13.4pc
Published 24/04/2010 | 05:00
US-based investment adviser Capital Research and Management has boosted its stake in Irish building materials firm CRH to 13.4pc. This, combined with a positive analysis by Citigroup analysts, prompted a surge in CRH's share price yesterday.
Capital's purchase of more than 1.67 million shares in CRH, at an aggregate price of roughly €33.5m, brought its total holding to 91.25 million shares.
The announcement sparked strong buying interest in CRH, with the shares jumping almost 5pc in earlier trading to €21.20.
Capital Research and Management is part of the Capital Group, which is one of the three largest mutual fund operators in the United States.
Yesterday, Citigroup analysts Aynsley Lammin and Clyde Lewis said that despite a difficult outlook for CRH's private non-residential US exposure, there was "increasing evidence" that the economy there was turning more positive. CRH generates almost 50pc of its turnover and profits in North America.
Citigroup added that CRH has one of the strongest balance sheets in the sector and was well placed to "lead the next phase of consolidation in the sector". The analysts also slightly increased their earnings forecasts for CRH.
Earlier this week, it emerged that an acquisition vehicle called Marwyn Materials had approached mining giant Anglo American with a view to buying its Tarmac unit, which had been put up for sale before by Anglo, in 2007. The Tarmac division is thought to be worth in the region of $4bn (€3bn) to $6bn (€4.5bn). Earlier this year, Anglo sold some of Tarmac's European operations for $400m.
When Anglo was looking for buyers for Tarmac in 2007, CRH was among the companies that was believed to be interested.
Citigroup said the market was waiting for CRH to announce some acquisitions.
"Assuming they don't overpay, we expect this to be positively received by the market," said the analysts, who have maintained CRH's buy rating and raised the price target to €24.