Analysts question value put on CRH brick business

Analysts have expressed doubt over valuations being put on CRH’s UK-based brick business Ibstock.

Reports surfaced, over the weekend that Ibstock could be set to go for £500m (€630m), with German roofing supplies group, Braas Monier joining a growing group of interested parties, which also reportedly includes private equity firm Bain Capital. Ibstock is believed to be part of the building materials giant’s non-core asset disposal programme –

“The speculation on the clay business is further evidence of progress with the disposal programme. However, we would caution on the speculated £500m price tag, as it looks high versus the estimated financial metrics of the business,” said Robert Eason of Goodbody Stockbrokers.

“We estimate that CRH’s clay business has total annual sales of around £400m/€500m, with operations in the UK, Germany, Benelux and Poland. In 2013, the business generated an earnings before interest, tax, depreciation and amortisation of less than €10m — circa 5% of the European products division,” he added.

CRH has not commented on industry speculation. However, earlier this month management said progress was well underway on its €1.5bn to €2bn non-core asset divestment programme, and that proceeds of about €400m were expected to be generated this year. It is believed about 30 sales are underway.

Realising €400m in asset sales this year has already led to analysts suggesting it could accelerate CRH’s ongoing acquisition activity.

A further six bolt-on buys were completed in the third quarter, bringing the group’s overall acquisition and investment spend, for 2014, to €170m by the end of September.


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