CRH in €600m expansion spend

BUILDING materials giant CRH spent 600 million on acquisitions and investments in 2011, the bulk of which were made in the second half of the year.

The Irish group, which last month switched its primary share listing from Dublin to London, said yesterday — via a capital expenditure update — that it spent €400m in the second six months of 2011, across its European and North American operations.

Of that outlay, €195m went on three acquisitions and one investment by its European Materials division, which invested in Belgium, Ukraine and Finland.

Another €28m was spent by CRH’s Europe Products & Distribution business, which made four acquisitions expanding its operations in Belgium.

Across the Atlantic, nine acquisitions, costing €112m, were carried out by the group’s Americas Materials division, which carried out an extensive bolt-on purchase programme during the second half of the year, and another six acquisitions were made by the Americas Products & Distribution operations, to the combined tune of €72m.

Chief executive Myles Lee said: “The bolt-on transactions are very much in keeping with the group’s strategy to acquire businesses which add value to our existing operations, or which expand our footprint in developed markets where we see opportunities for further growth.”

Mr Lee added that the group hadn’t forgotten its operations in developing countries, with investment via its associate in China and a strategic bolt-on acquisition in Ukraine also included in the 2011 activity.

Commenting on the second half spend, Robert Eason of Goodbody Stockbrokers said: “Despite almost €600m being spent in 2011, the average transaction value was only €13m. In our view, this focus on the smaller deal better serves shareholders, as the price for bigger deals tends to get bid up, leaving less on the table for the acquirer.”

CRH’s management also said, during the second half of 2011, that the company could “very comfortably” spend between €1.5bn and €2bn on acquisitions up to the end of 2012, without stretching its balance sheet or putting pressure on its credit rating.

CRH’s next scheduled update is its full-year 2011 results at the end of February.