Building materials group CRH plans spending spree even if merger fails

CRH is continuing to work under the assumption that the merger of its European peers Holcim and Lafarge will succeed, but has maintained that a collapse of the proposed deal will not hamper its own ambitious growth plans.

Shareholders at the Irish cement and building materials giant yesterday voted unanimously in favour of its plan to spend €6.5bn on acquiring a number of international assets that the Swiss and French companies are required to sell in order to achieve regulatory approval for a merger.

At the EGM in Dublin, 99.93% of shareholders backed the idea, described as potentially “game changing” for CRH.

Earlier this week, Swiss- cement company Holcim stalled the merger deal, demanding renegotiations on terms with its French counterpart. The two parties are continuing to meet to address concerns but commentators are still expecting a deal to succeed.

CRH is in constant contact with the two companies, management said yesterday.

Holcim and Lafarge have reportedly closed in on preliminary agreements over revised leadership changes and financial terms, with a key Lafarge shareholder yesterday quoted as saying the deal will not fail.

CRH chief executive Albert Manifold declined to comment when asked if he thought a deal would succeed. The group’s chairman, Nicky Hartery, suggested a timeframe of mid-2015 for conclusion, if Holcim and Lafarge can agree fresh terms.

Mr Manifold said processes have to be carried out over three companies and that yesterday was about CRH undertaking its responsibilities in gaining shareholder approval for its element of the deal.

“We can only control what we can control,” he said.

If the company had not gone ahead with its EGM, it would have been liable for a ‘break fee’ of almost €160m, which it will also receive should the Holcim/Lafarge deal ultimately fail.

Mr Manifold also said that while the Irish company is still working towards the larger merger succeeding, a failure will not ruin CRH’s growth strategy.

“It forms an important part of our growth strategy, but it is not THE strategy. Our pipeline of acquisitions is quite full at this time and is, in fact, fuller than at any stage in the past six or seven years,” Mr Manifold said.

This deal “forms part of our growth process, but it is not the only part and with or without it, CRH will grow; we have a plan B, C, and D”.

He added that the group would still be interested in the assets it hopes to buy in this transaction even if the merger ultimately collapses.

The EU’s competition regulator is due to rule on CRH’s takeover of the Holcim/Lafarge assets before the end of next month.

Last month, as part of its annual results presentation, CRH said that nearly €1bn generated from operations last year could fund a strong pipeline of smaller deal prospects. The €200m spent on transactions last year is likely to be replicated this year, separate from the funds already earmarked for the Holcim/Lafarge assets.

CRH is making good progress on its non-core divestment programme, which was announced last year as a €1.5bn-€2bn three-year sale asset programme. As of the end of 2014, almost €350m of assets had been sold, with that figure due to rise to over €920m by the middle of this year.


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