Ireland’s CRH is set to become the world’s third biggest building material firm through a £5bn acquisition of assets being sold by Lafarge and Holcim.
Lafarge and Holcim have been looking to sell a raft of businesses to pave the way for a merger between the two companies. They have bundled the assets into an entity called Newco, which in 2013 produced 23 million tonnes of cement, 79 million tonnes of aggregates, eight million tonnes of asphalt and 10 million cubic metres of ready-mixed concrete.
Newco is expected to generate revenue of £3.8bn this year and ebitda of £564m. Approximately two-thirds of its revenue is from Europe. Outside Europe, £750m comes from Canada and £450m comes from Brazil and the Philippines combined.
CRH said that the acquisition complemented its existing footprint well. CRH's 2013 revenue was £13.5bn.
CRH chief executive Albert Manifold said: "This transaction represents a significant value creation opportunity for CRH. We are acquiring a quality portfolio of assets, which complement our existing positions, at an attractive valuation and at the right point of the cycle. The acquisition strengthens our presence in important markets across North America, Western, Central and Eastern Europe as well as providing new platforms for growth in emerging markets. The assets will integrate well into existing CRH networks benefiting from our strong business-building capabilities while providing an important platform for future development opportunities. We have maintained our disciplined investment approach through our continued focus on capital efficiency and remain focused on bringing returns back to peak during this cycle."
