Friday 19 January 2018

CRH says it didn't overpay in €6.5bn Lafarge-Holcim deal

CRH denies suggestions it overpaid in €6.5bn Lafarge-Holcim deal
CRH denies suggestions it overpaid in €6.5bn Lafarge-Holcim deal
Gavin McLoughlin

Gavin McLoughlin

Ireland's biggest company CRH has rejected suggestions that it overpaid for €6.5bn of assets that fell into its path as a result of the Lafarge-Holcim tie-up.

After Holcim shareholders backed the merger on Friday, the tie-up is expected to be completed in July, paving the way for CRH to take control of assets in Europe, Canada, Brazil and the Philippines.

But the move faced criticism from analysts.

""We think they've overpaid," Merrion Capital's David Holohan said after the deal was announced.

"With two-thirds of the assets in Europe, the deal is going to be dependent on benefiting from any increase in construction activity in Europe," he added in cutting his recommendation on CRH shares to 'sell'.

After the company's agm this week a CRH spokesman defended the move.

"You'll see from the chief executive's review in the annual report that 'the financial discipline of the group has served us well and has positioned us strongly to avail of the opportunity to acquire these businesses at an attractive valuation and at the right point of the business cycle'.

"These assets are being acquired at a low multiple at the bottom of the cycle and they represent an excellent strategic fit with CRH's existing assets."

Now the company is looking at two more potential deals worth a combined €1.5bn as it seeks to overtake Lafarge-Holcim and Saint-Gobain as the world's largest building materials company, chief executive Albert Manifold revealed.

CRH faced criticism at its agm from shareholders concerned about the company's 25pc stake in Israeli company Mashav. Mashav is the holding company for cement company Nesher, and activists claim Nesher cement has been used to help build a wall that separates Israel from the West Bank. Protesters unfurled a banner in front of CRH management, who faced calls to get rid of the stake.

Asked if political arguments would influence CRH's holding of the stake, a company spokesman said CRH doesn't comment on specific acquisitions or divestments.

However, he added: "as a general point, the divestment programme is designed to exit businesses which no longer meet CRH's returns or growth criteria and reallocating capital at higher returns."

Sunday Indo Business

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