Firm plans for €300m spending on acquisitions

By Geoff Percival

Wednesday, August 25, 2010

BUILDING materials group CRH has said that it will likely spend around €300 million on acquisitions this year, in total.

While significantly down on the record €2.2bn outlay levels seen just a few years ago, it would mean that the Dublin-headquartered group would match second half spend with this year’s first-half tally of €159m.

That figure went on 13 transactions (nine ‘bolt-on’ buys in the US and four in Europe) and on funding for two of the group’s projects in China.

Already in the second half of the year, CRH has spent €86m on six transactions; the latest of which – the acquisition of 90% of Swiss aggregates and concrete company, Risi – was formally agreed upon (pending regulatory approval) earlier this week.

At the announcement of CRH’s first half results yesterday, group chief executive Myles Lee said that further bolt-on acquisitions could be expected before the end of the year.

Mr Lee was not specific regarding potential future acquisitions, but did say that CRH has a continuing interest in increasing its presence in Asia and emerging markets.

The group is also looking to dispose of two non-core assets – its European-based climate control and insulation businesses.

Management said, yesterday, that strong interest has been shown in the latter (final bid deadline for the insulation business was last Friday) and that it should be sold before the end of the year.

Progress on the sale of the climate control business could take slightly longer, however, as the information memorandum on the asset isn’t likely to be circulated to potential interested parties until early next month.

The two assets could fetch a combined value of between €300m and €400m for the group.

It is understood that no further disposals are planned, even though some of the group’s units – including those both here and in Spain – are currently underperforming.

In terms of cost reduction, CRH is likely to lower its costs by over €330m in 2010, as a whole, and decrease them further next year.

This appeared in the printed version of the Irish Examiner Wednesday, August 25, 2010