2nd Feb 2015 07:29
LONDON (Alliance News) - CRH PLC Monday said it has agreed a deal with Lafarge SA and Holcim Ltd under which the Irish building materials company will buy a range of assets being sold by its French and Swiss rivals as part of the conditions for their merger to be given regulatory approval.
Under the deal, CRH will pay EUR6.5 billion to buy assets from the companies primarily in Europe, Canada, Brazil and the Philippines. It will use EUR2.0 billion of cash from its balance sheet, new bank debt, and the proceeds of a share placing to fund the deal, which it expects to result in EUR90 million of synergies by year three after completion. It also expects the deal to boost earnings per share by about 25% in the first full year of ownership of the assets.
Lafarge and Holcim said in a statement Monday they expect the deal to be completed in the first half of this year. They said it is subject to completion of their merger and said the divestment plans will be submitted to the relevant European authorities.
The Lafarge-Holcim statement said the combined businesses being sold to CRH generated estimated sales in 2014 totalling EUR5.2 billion, with an estimated operating earnings before interest, tax, depreciation and amortisation of EUR744 million.
In its statement, CRH said it expects the assets to report Ebitda of EUR752 million in 2014, as it confirmed its own Ebitda guidance for the year at no less that EUR1.63 billion excluding those assets.
"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," CRH Chief Executive Albert Manifold said in a statement.
CRH has launched an underwritten placing of 74.0 million shares to help pay for the acquisition. Swiss bank UBS is acting as sole global coordinator for the placing, with UBS, JP Morgan, Merrill Lynch and J&E Davy acting as joint bookrunners. The placing represents 9.99% of CRH's current share issue.
The Irish building materials company, which expects the deal to make it the third-largest building materials company in the world, said its pro-forma net debt to Ebitda cover is expected to be 3.2 times, which it said it will reduce by disposals of assets in the wake of the portfolio review it previously announced.
By Sam Unsted and Steve McGrath; [email protected]; @SamUAtAlliance
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