CRH in €344m US firms takeover

BUILDING materials giant CRH announced one of its biggest-ever spending sprees yesterday with the takeover of three new businesses in the US worth €344 million.

The deals, in the eastern states of Kentucky and Virginia and on the Canadian border in Minnesota, will allow the company to ramp up its road construction and road materials supply activities but will also make it a heavy hitter for the first time in specialist rock-clearing and earth removal.

The markets were happy with the news and added 3.5% to the share price.

Chief executive Liam O’Mahony said the three businesses were well-managed and had “excellent reserves and strong market positions”. He added that they were “a unique geographic fit” with the existing businesses in CRH’s materials division in the US.

The company declined to break down the amount spent on each business, but the biggest of the three deals involved Mountain Companies, a Kentucky-based materials, asphalt, paving and construction company.

Mountain has reserves of over 400 million tons of stone, sand and gravel and produces around two million tons of asphalt and five million tons of aggregate material every year. The company has landed government supply contracts worth around €500m over the past five years.

CRH will also take a 50% stake in Bizzack, a heavy construction business that specialises in rock-cutting and clearing work in Kentucky and Virginia.

The remaining 50% will be retained by Kentucky businessman Leonard Lawson, who also previously owned Mountain.

CRH finance director Myles Lee said Bizzack’s business was highly specialised and new to the group and that it made sense to work in partnership with the existing shareholder while CRH developed its expertise in the area.

The third deal involved Southern Minnesota Construction, a supplier of asphalt and aggregate materials that is around one-fifth the size of Mountain.

Mr Lee said CRH was already active in the neighbouring state of Iowa and that its familiarity with the region had allowed it to spot the opportunity.

Mr Lee said the deals were “a good package” and fitted in with CRH’s strategy of expanding on both sides of the Atlantic.

Around half of the company’s operations are based in the US but its most recent major transactions have been in Europe, such as the €650m acquisition of Dutch materials heavyweight Cementbouw in 2003.