Saturday 24 August 2019

Sale of CRH's distribution arm drives up shares

Deal: CRH boss Albert Manifold is aiming to simplify the firm
Deal: CRH boss Albert Manifold is aiming to simplify the firm
Donal O'Donovan

Donal O'Donovan

US private equity giant Blackstone has bought CRH's European distribution arm for €1.64bn.

CRH shares closed up 2.34pc in Dublin at €30.20 each. The sale had been well-flagged.

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CRH said in February it had launched a strategic review of the unit, which operates in Germany, France, Switzerland and the Benelux countries.

The division being sold is made up of CRH's general builders merchants business in six markets, and includes its sanitary, heating and plumbing business.

In 2018, the business generated pro forma earnings before interest, taxation, depreciation and amortisation (ebitda) of €155m on sales of €3.7bn. Profit before tax was €124m. Private equity firms Advent, Bain, Lone Star and CVC had all previously been named as potential buyers.

The deal will help simplify CRH's business, according to CEO Albert Manifold.

"The transaction announced today demonstrates the continued execution of CRH's strategy of creating value for our shareholders through active portfolio management, the efficient allocation of capital, and creating a simpler and more focused group going forward," Mr Manifold said.

He said proceeds will be used to fund further acquisitions and for its ongoing share buyback programme.

Two years ago, CRH sold Allied Building Products, its US distribution business, to Beacon Roofing Supply for $2.6bn (€2.3bn). It used cash from that sale to help fund the subsequent acquisition of US cement business Ash Grove.

Bank of America advised CRH on the latest sale and is understood to be in pole position to finance Blackstone's acquisition. The US bank is understood to have structured a so-called staple finance package - a pre-prepared loan deal which would have been available to any qualified buyer - of around €1bn. Blackstone could now tap that funding.

Irish Independent

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