CRH hires JP Morgan to sell Turkish firm

Ireland’s biggest cement company, CRH and its Turkish partner Eren Holding have hired JP Morgan to sell their Turkish joint venture, according to reports.

Bloomberg yesterday reported that CRH and Eren were to sell jointly-owned Denizli Cimento Sanayii, in which they both have a 50% stake.

A spokesperson for CRH was yesterday unable to confirm or deny the reports, saying that the company has a policy of not commenting on speculation.

According to analyst with Davy Stockbrokers, Robert Gardiner, speculation surrounding the sale of Denizli as part of a wider portfolio review is not new as, he said, it is no longer considered part of CRH’s core business.

“The rationale for disposals as part of the portfolio review is very clear. These units do not meet future returns and growth requirements and are hence considered non-core,” said Mr Gardiner.

“With specific reference to Denizli, the Turkish market has proved volatile since the acquisition while cement export markets in the Mediterranean have become significantly more competitive.”

With reported sales of about €75m in 2013, Mr Gardiner estimates that, given sector margins, the sale could be worth €50m to CRH and the same to Eren.

Denizli is the market-leading cement producer in the Aegean region with sales split between the domestic Turkish market (80%) and export markets (20%).

Three main bidders — Oyak Cement, Limak and Sabanci — were identified by the Bloomberg report as interested in the acquisition of the business, with a deal likely to be completed by October.

The report also states Denizli is looking to increase its sales to 250m liras (€86.8m) from 220m liras last year. CRH acquired its 50% share of the Turkish business in 2007.