CRH eyes up four plants in India

CRH is understood to have held exploratory talks with one of India’s largest cement producers over the possible acquisition of four cement plants.

The Dublin-headquartered building materials giant was not commenting on the matter yesterday beyond its usual line that it doesn’t comment on market speculation. However, it is understood the talks held have been very early stage.

Analyst commentary based on media reports coming out of India suggested CRH was in “advanced discussions” with India’s third largest cement producer, Jaiprakash Associates — which is owned by industrial conglomerate Jaypee Group — over the potential purchase of four cement plants in the country; adding that the deal could amount to a combined spend of over €1bn.

One market source, however, suggested the speculation from India could be an attempt by Jaiprakash to build interest in assets it wants to offload.

It was reported last month that two other leading cement companies — France’s Lafarge and India’s Birla Group — were also interested in the facilities, which have a combined capacity of just under 10m tonnes.

CRH, via its 50% shareholding in local company My Home Industries is already the second largest cement producer in India’s Andhra Pradesh province, where one of the four Jaiprakash facilities is based.

A €1bn acquisition would represent a significant increase in CRH’s recent spending patterns. For 2011, as a whole, the group spent €600m on acquisitions and investments.

In the first half of 2012, CRH reported an investment spend of €250m; €155m of which was spent in Europe, with €89m spent in the Americas.

However, it has been well documented that CRH has a strong war chest available for large acquisitions — financial headroom that was expanded with the company selling its stake in Portuguese cement company Secil this year for over €570m.

At CRH’s AGM in May, chief executive Myles Lee said that China and India are the regions where the group’s management is focused on for medium-to long-term growth.

Earlier this year, CRH said it would continue to spend on acquisitions. “Benefits from acquisitions completed in 2011 leads us to expect further progress in the year ahead,” Mr Lee said in February, unveiling full-year financial results.

He added that CRH would be “reasonably active” — as it already has been — in the marketplace during 2012.

Regarding the prospects for an Indian deal, some analysts seem unsurprised — pointing out that the speculated price tag would be in the region of what CRH paid for its stake in My Home Industries four years ago.

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