Business Irish

Sunday 15 December 2019

CRH 'considering sale' of Philippines cement unit with price of up to $3bn

Growth: CRH chief executive Albert Manifold is aiming to create a more focused business
Growth: CRH chief executive Albert Manifold is aiming to create a more focused business

Aaron Kirchfeld

Ireland's biggest company, CRH, is considering a sale of its Philippines cement business, as the building materials giant seeks to raise cash by offloading non-core assets, according to people familiar with the plan.

JP Morgan Chase is helping CRH find a buyer for the operation, which could be valued at between $2bn and $3bn (€1.8bn to €2.7bn), according to sources.

CRH and its adviser are sounding out bid interest from Asia and Europe, added the sources.

A disposal of the Philippines activities would come after CRH agreed in July to sell its European plumbing and heating distribution business to Blackstone for €1.64bn in cash.

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CRH chief executive Albert Manifold is seeking to create a more focused building materials group, while generating cash for acquisitions.

CRH entered the Philippines in 2015 when it acquired Republic Cement, the second-largest cement producer in the country.

The deal was part of a $7.2bn spree on assets that Holcim and Lafarge had to sell as part of their merger.

CRH teamed up with local conglomerate Aboitiz Equity Ventures for the acquisition in the Philippines.

The Irish company has five plants in the Philippines, with an annual cement capacity totalling 7.5 million tonnes.

The disposal plan is at a preliminary stage and no final decision has been made on a sale, said the sources.

Representatives for CRH and JP Morgan declined to comment.

The Philippines has seen consolidation in its cement market amid tough price competition.

Earlier this year, San Miguel agreed to acquire an 85.7pc stake in Holcim Philippines from entities controlled by LafargeHolcim for an enterprise value of $2.15bn.

Shares in CRH were trading just slightly higher in Dublin yesterday afternoon, at €33.65, giving the group a €26.5bn market capitalisation.

CRH's shareholders include Stockholm-based Cevian Capital, Europe's biggest activist investor.

Since taking its stake in CRH about a year ago, the group has already seen the value of its investment increase by as much as €200m.

During the summer, Cevian managing partner Christer Gardell insisted that CRH was "too complex".

"This is an attractive industry and CRH has a strong position in its main markets, but the company has become too complex, both structurally and operationally, which hampers performance and traps value," he said.


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