Construction materials firm buys US rival for $1.3bn

CRH follows Tarmac deal with the takeover of a Californian glazing industry supplier

CRH, the Irish building materials group, has sealed a $1.3bn (£839m) takeover of a Californian rival just weeks after closing the biggest acquisition in its history.

CRH, which completed its £5bn takeover of a number of Lafarge Tarmac assets in the UK at the start of the month, said it was buying Los Angelesbased CR Laurence (CRL), one of North America’s largest makers and distributors of products to the glazing industry.

Albert Manifold, chief executive of CRH, had previously said he would continue to search for deals following the Lafarge Holcim acquisition, but that it would take around a year to get to grips with the wide-ranging portfolio of assets the group had acquired in the transformational deal.

The CRL deal will boost CRH’s existing glazing division, called Building Envelope, which employs 4,500 staff across 48 locations in the US. CRL has more than 1,600 employees.

CRH said that it expected CRL sales of around $570m a year and profits of around $115m. The group said that it anticipated cost savings of $40m from 2017 following the integration of CRL into its Building Envelope division.

Dublin-based CRH, which has a London listing, said it would finance the deal through existing resources.

“CRL is a business with strong growth characteristics and an excellent operational fit with our Building Envelope business in the US and represents an exciting opportunity for CRH,” said Mr Manifold, who added that his company had been in talks with CRL about a deal for seven years. “In addition to increasing our exposure to the growing non-residential and residential construction markets in the US, CRL’s strong brand, focus on innovation and growing presence in Europe and Australia, combined with CRH’s international reach, provide the potential for this high-growth business to become a global leader.” The acquisition came as CRH posted interim results that showed revenues rose 13pc to €9.4bn (£6.9bn) in the six months to the end of June while pretax profits rose by €2m to €53m. The chief executive said this was largely driven by the surging US building market – which represents about half of CRH’s revenues – where residential and non-residential work is booming, while heavy construction, such as infrastructure, is falling in real terms.

“We are at an inflexion point in the construction cycle,” he said. “Normally the building industry moves in sevenyear cycles but I believe we are now two years into a 10-year-long period of growth in the US, and at the early stage of recovery in an even longer cycle in Europe, where stability is returning.”

Recovery from the financial crisis is releasing pent-up demand for homes and commercial buildings, he said, with the industry lowering prices as companies fight for market share.

CRH has ruled out further large acquisitions for at least the next year and a half and aims to cut its debt-to-earnings gearing from the current 3.5 times following the CRL acquisition to 2.5 times by the end of 2016.