Lafarge deal could boost earnings at CRH by 35%

CRH’s €6.5bn acquisition of certain assets offloaded by European cement giant LafargeHolcim – which completed, slightly ahead of schedule, this week – could enhance its earnings by more than 30% over the next year, it has been claimed.

“We see the deal as a transformational acquisition, which could be around 34% accretive to earnings in its first full year,” said Robert Gardiner of Davy Stockbrokers in a note yesterday.

“The group is taking advantage of its sector-leading financial strength to acquire a unique package of assets at an opportune time in the cycle. With the deal now largely complete [the Asian assets that form part of the transaction are expected to complete by the end of next month], the integration process can begin with the group looking to deliver synergy savings of €90m over three years.”

CRH initially agreed last February to buy assets across Europe, Asia and the Americas that were having to be sold to make way for the mega European cement merger. The move is set to boost the Dublin-based group into becoming the world’s third largest building materials business.

Speaking on the back of this week’s deal completion, CRH chief executive Albert Manifold said: “CRH is a step closer to achieving our aim of becoming the world’s leading building materials company.

“The businesses we are acquiring, which represent an excellent geographic fit with CRH’s existing operations, are all strong performers in their respective areas. The integration of these high quality assets — which we have acquired at an attractive valuation and at the right point of the cycle — will strengthen our presence in a number of key markets, as well as providing new platforms for strategic growth.

“The additional scale will help us to improve efficiency, speed up innovation and provide an even better service to our customers.”

CRH’s record purchase will boost the group’s international workforce by 15,000 people to 91,000 and will see management set about integrating new assets covering 685 locations in 11 countries.

“We continue to believe there is significant upside to the initial acquired Ebitda of €752m,” said Robert Eason of Goodbody Stockbrokers.


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