BackCRH agrees to buy Holcim-Lafarge assets for $7.3 bn
The deal allows CRH, in partnership with KKR & Co., to move into new markets and expand its existing presence
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London/Paris: CRH Plc, the Irish building-materials company, entered a binding agreement to buy assets that cement makers Holcim Ltd and Lafarge SA need to sell ahead of their planned merger.
The deal will allow Dublin-based CRH, which is partnering with KKR & Co., to move into new markets and expand its presence in existing ones.
The builder, which was formed in 1970 through the merger of two Irish companies, already operates in 35 countries with about 76,000 people and has about €18 billion in annual sales.
The transaction has an enterprise value of €6.5 billion ($7.3 billion or ₹ 45,100 crore) and will be funded by a combination of cash on balance sheet, new debt and a 9.99% equity placing, CRH said in an emailed statement on Sunday. Full details of the acquisition will be released later.
Holcim and Lafarge needed to divest businesses with revenue of about €5 billion to ensure regulatory approval for their merger which will combine cement- and crushed-rock operations with $40 billion in annual revenue.
The companies expect the merger, agreed on in April 2014, to be completed in the first half of this year.
CRH, which has the advantage that it can cut costs from overlapping businesses, had been competing with other bidders including a group formed of Cinven Ltd and Blackstone Group LP, people familiar with the matter said previously. The plan to merge Jona, Switzerland-based Holcim and Paris- based Lafarge to form the world’s biggest cement maker was approved last year by the European Union subject to the sale of overlapping operations in more than half a dozen countries.
The EU said at the time that its decision was conditional upon the divestments of Lafarge businesses in Germany, Romania and the UK and of Holcim units in France, Hungary, Slovakia, Spain and the Czech Republic.
The merger may allow Holcim and Lafarge to cut costs by combining operations as some of the industry’s kilns run at a loss after the recent global recession eroded demand.
An acquisition spree before the financial crisis, including Lafarge’s €10.2 billion purchase of Orascom Cement in 2008 and Holcim’s $4.1 billion deal for Aggregate Industries in 2005, widened the dominance of both companies. Bloomberg
Matthew Campbell in London and Joe Brennan in Dublin contributed to this story.
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