Saturday 25 May 2019

CRH bolts on Swiss firm in £335m deal

CYRIL HARDIMAN

CRH has expanded its European operating base with its first acquisition in Switzerland. Jura Group has been bought for a cash consideration, including debt, of £335m (euro 425m). But surplus assets, including marketable securities and property, are to be sold reducing the net cost to £211m (euro 268.4m).

Jura is a major cement, aggregates and ready-mixed concrete with a regional building materials distribution business.

The company holds a 17pc share of the Swiss market, ranking number two player behind Holderbank (60pc) with Vigier having a market share of about 14pc.

The acquisition extends CRH's reach in mainland Europe. Jura has been purchased as a stand-alone business and not for its proximity to the major German market where CRH only has a modest exposure.

The company's product is all sold in Switzerland but Jura, on the other hand, will enable CRH to further strengthen its relations in the region and its connections with suppliers.

This is just what the group did when it entered the Polish market in the mid-1990s, establishing a small base which they have since built up into a major business.

This acquisition comes two months after CRH raised close on £300m in a placing which boosted its acquisition firepower to more than £1bn. This takeover, therefore, will not restrict the group's ability to do even larger deals.

The transaction, according to ABN AMRO's John Clarke, "brings CRH's end-2000 gearing level to only 75pc (from a current forecast of 66pc). Interest cover in 2001 will still be very comfortable at about six times," he adds.

Jura operates two modern, well-equipped and energy-efficient cement plants at Wildegg in the north of the country and at Cornaux in the West. Jura currently operates at 70pc of its cement capacity.

The company's distribution division also has a network of 43 outlets concentrated on heavy building materials, sanitary ware and ceramic tiles.

It is currently not yielding a sales margin, but CRH will be hoping to rectify this going forward.

The cement/concrete business is very profitable at a margin of about 19pc.

Mr Clarke calculated the acquisition will add about 2c to CRH's EPS in a full year.

The Swiss building materials market was tough for a couple of years, but has improved over the past year with growth in output projected at 2pc next year.

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