Wednesday 18 October 2017

Rival aims to derail CRH bid for US firm

Chief executive Albert Manifold’s CRH is aiming to buy Ash Grove Cement for €2.9bn
Chief executive Albert Manifold’s CRH is aiming to buy Ash Grove Cement for €2.9bn
Ellie Donnelly

Ellie Donnelly

Building materials group CRH's bid to acquire Ash Grove Cement for $3.5bn (€2.94bn) has hit a stumbling block after the emergence of an 11th-hour bidder for the Kansas-headquartered company.

Ash Grove has confirmed that it received a competing proposal to acquire the group at an indicated enterprise value of $3.7bn to $3.8bn.

The board of Ash Grove, which is stock market-listed but family controlled, agreed that the proposal has merit and it intends to engage with the third party.

Ash Grove now has 15 days in which to evaluate the proposal.

While the identity of the third party has not been announced officially, it is believed to be North American building materials firm Summit Materials.

The third-party approach is a preliminary non-binding proposal, and Ash Grove has yet to evaluate it completely.

In addition, there is no indication that the third party proposal is superior to the bid from Ireland's biggest company.

In a statement on Thursday, Ash Grove said that its board was continuing to recommend that its stockholders vote in favour of the CRH proposal.

CRH must now wait for Ash Grove's evaluation of the new bid before it determines its next step.

Ash Grove, which is the biggest maker of concrete products and the second largest supplier of aggregate materials for construction in the US, reported profit before tax of $215m and gross assets of $2.5bn for the year ended December 31, 2016.

The business operates eight cement plants across eight US states, and CRH is currently its largest customer.

In a note to the Irish Stock Exchange yesterday, CRH noted the announcement made by Ash Grove in respect of the third-party bid.

In particular, the statement from CRH said that it noted that the time period for obtaining Ash Grove shareholder approval had been extended.

The proposed acquisition of Ash Grove comes after CRH announced in August the sale of its US distribution business, Allied Building Products, for $2.63bn (€2.2bn) to Beacon Roofing Supply.

At the same time the company said that it was buying German lime and aggregates producer Fels for €600m.

The US business was being sold at a multiple of 16 times earnings compared to the seven times earnings, post synergies, that CRH was paying for its German acquisition.

Yesterday shares in CRH on the Irish Stock Exchange fell by 1.76pc to €30.9350, having closed on Thursday at €31.4900.

Irish Independent

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