Building materials giant CRH is expected to spend over €1bn this year on bolt-on acquisitions, with outlay in the first quarter alone already topping €600m.
Earlier this month, on the back of a strong set of annual results, CRH chief executive Albert Manifold said the group could comfortably spend between €2bn and €3bn on acquisitions over the next 18 months, but stressed this range related to spending capacity rather than fixed outlay targets.
However, the same results presentation noted that CRH has already spent around €500m on eight acquisitions and investments since the turn of the year — more than double the amount spent in the whole of 2016. It also raised around €400m via disposals last year.
That €500m spend has already been added to, with US-based composite building materials manufacturer Advanced Environmental Recycling Technologies (AERT) reporting that it has signed an agreement to be acquired by CRH’s US subsidiary, Oldcastle Architectural, for a total consideration of $117m (€109m).
“Cumulative spend in the year-to-date [on the back of this latest deal] is at least €600m and highlights how active the M&A pipeline is and puts the company on target for its largest level of bolt-on spend in almost a decade,” said Robert Eason at Goodbody Stockbrokers.
“Such activity is all underpinned by a very strong balance sheet, with net debt to EBITDA at the end of 2016 of 1.7 times,” he added.
The AERT deal will see CRH grow its presence in the advanced decking category and will complement its existing Americas Products business portfolio. AERT generated sales of $85.3m last year and earnings of $11.3m.
CRH had a quiet year on the spending front in 2016 having shelled out around €8bn in a record year of transformational headline buys in 2015. The bulk of that spend went on buying assets offloaded to make way for the merger of European cement peers Holcim and Lafarge, while CR Laurence (CRL) — the largest maker of installation products in North America — was also acquired.
Mr Manifold said, this month, CRH’s development teams have been active and have built up “a stack of deals”, adding the group has a strong pipeline of potential acquisitions but can afford to be “very selective”. It is eyeing acquisitions globally, with the Philippines and Poland recently suggested as areas of interest.
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