Friday 24 May 2019

CRH gets windfall of €574m as Portuguese firm buys out stake

John Mulligan

John Mulligan

Portuguese firm Semapa has agreed to pay CRH €574m for a stake the Irish group owns in a joint venture between the two companies.

A Paris-based international arbitration tribunal ruled last year that CRH had to sell its 49pc stake in Portuguese cement maker Secil.

CRH and Semapa had been at loggerheads since 2009, when Semapa claimed that it was entitled to exercise an option that would allow it to acquire the Irish firm's stake in the joint venture.

CRH paid €429m to Semapa in 2004 to buy a 49pc stake in Secil. That included the assumption of €100m in debt.

After the firms later bickered about entitlements, the matter was referred to the International Chamber of Commerce for a final resolution.

CRH had strongly believed its stance -- which rejected Semapa's claim it was entitled to fully acquire Secil -- would be vindicated.

Semapa confirmed yesterday that it will now buy the CRH stake by May 15.

While it appeared that CRH may have lost out, it has quite possibly had a lucky escape.


Portugal, which was bailed out last year, has been struggling to get back on track. While its unemployment rate is broadly similar to Ireland's, at 14pc, it lacks a broad industrial business base. Portugal's economy is expected to contract 3.3pc this year.

The amount being paid by Semapa represents a multiple of 11.5 times earnings in a sector where multiples are currently running at about 6.5 times earnings.

"This is a significant positive for CRH," said analyst Barry Dixon at Davy Stockbrokers.

"Not only does it remove a business that is struggling, but it further strengthens the company's balance sheet, giving it the firepower to invest in faster-growing businesses and economies." He added that the sale of the stake would have a "significant impact" on CRH's balance sheet.

Shares in CRH were trading 2pc higher by yesterday afternoon in London.

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