Ireland’s CRH to buy Lafarge, Holcim assets for $ 7.4 b
Friday, 20 February 2015 00:05
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Reuters: CRH has agreed to pay € 6.5 billion ($ 7.4 billion) for assets from rivals Lafarge and Holcim, in a deal that will transform the Irish company into the world’s third-biggest building materials supplier.
Investors welcomed a move that will expand the company’s global reach, making it the largest building supplier in Central and Eastern Europe and doubling its presence in emerging markets.
However, some analysts said it was paying a high price for assets Lafarge and Holcim have to sell to win regulatory approval for their planned merger, and that the deal was a big bet on construction markets in a faltering global economy.
“We think they’ve overpaid,” said Merrion Stockbrokers’ David Holohan, pointing to press reports the price for the assets rose € 500 million in the last week of the auction.
“With two-thirds of the assets in Europe, the deal is going to be dependent on benefiting from any increase in construction activity in Europe,” he added, cutting his recommendation on CRH shares to ‘sell’ from ‘hold’.
Data last week showed confidence in the euro zone’s construction sector declined in January amid fears of deflation and stagnating economies.
Lafarge and Holcim announced merger plans last year, hoping to cut costs, tackle overcapacity and weak demand by creating the world’s biggest cement maker. The firms said the sale to CRH put their tie-up on track to complete in the first half of 2015.
For CRH, the deal follows a breakneck expansion in the years before the financial crisis that CEO Albert Manifold brought to a halt just over a year ago by putting € 2 billion - or 20% of net assets - up for sale.
