CRH cements €6.5bn deal for Holcim-Lafarge assets

Irish building materials group CRH has confirmed it will spend €6.5bn on assets from Holcim and Lafarge as the two European cement makers dispose of operations to win approval for their merger.

CRH said the purchased operations are “highly complementary” and are expected to make it the “global number-three building materials player”.

After confirming it had held discussions last month, CRH has now signed a binding agreement with the Swiss and French groups. The FTSE 100-listed company fought off competition from a number of large private-equity players such as Blackstone in an auction for the assets.

The acquisition will be financed by a combination of €2bn of existing cash on CRH’s balance sheet, bank facilities and the proceeds of an equity placing of 9.99% of the company’s current issued share capital.

The assets, which include cement, aggregates, ready-mix and related construction activities, are located in North America, Western Europe, Central & Eastern Europe and various emerging markets. They generated €5.1bn of revenues and €752m of operations profits in 20133.

After the first full year of ownership, the assets should be 25% accretive to CRH’s underlying earnings. CRH also expects €90m of annual net synergies from the deal from year three.

"This transaction represents a significant value creation opportunity for CRH,” said chief executive Albert Manifold.

“We are acquiring a quality portfolio of assets, which complement our existing positions, at an attractive valuation and at the right point of the cycle.”

Completion of the deal is expected in mid-2015.