Significant expansion of CRH's US Materials operations
01 November 2005
CRH plc, the international building materials group, announces that it has recently completed three transactions which significantly expand its Materials operations in the US. The total combined consideration of US$413 million (euro 344 million) comprises cash, including debt assumed, of US$361 million (euro 301 million), plus deferred payments with a net present cost of US$52 million (euro 43 million).
CRH has acquired the aggregates, asphalt, paving and construction assets of the Mountain Companies, a vertically integrated business operating in the Appalachian regions of eastern Kentucky, southwest Virginia and along the Kentucky/West Virginia state line. With permitted reserves of over 400 million tons at eight quarries and one sand & gravel pit, Mountain produces approximately 5 million tons of aggregates and 2 million tons of asphalt annually. CRH has also acquired 50% of Bizzack, Inc., Mountain's heavy construction affiliate. Bizzack undertakes specialist rock clear-cutting and earth-moving work, a feature in this rugged and mountainous region. Mountain will be integrated with the Materials Division's West Virginia subsidiary, West Virginia Paving, to form a major new regional business unit within the Materials Division's Central group.
The Mountain deal represents a significant expansion for CRH's Americas Materials Division into Kentucky, Virginia and southwest West Virginia. After a record 2003, highway construction activity in Kentucky declined significantly in 2004, however, the market is forecast to recover steadily from 2005, aided by a significant increase in federal funding under SAFETEA-LU which is expected to underpin several large, federally-funded new infrastructure projects in the region.
In Minnesota, CRH has purchased the assets of Southern Minnesota Construction ("SMC"), the leading aggregates and asphalt supplier in the south-central region of the state. SMC has over 80 million tons of reserves and annual volumes of approximately 3 million tons of aggregates and 0.5 million tons of asphalt. SMC is a superb geographic fit with the Materials Division's existing Iowa business and is a significant market expansion into a new state for the Division. It will continue to be managed by the existing management team as a stand-alone business within the Materials Division's West group.
For the year ended 31 December 2004, combined sales for the acquired businesses (including 50% of Bizzack) amounted to US$294 million, significantly lower than in 2003, reflecting both the decline in Kentucky highway spending from the record 2003 level and protracted wet weather in southern Minnesota. 2004 EBITDA amounted to US$52 million with a much improved outturn expected for the current year.
Commenting on the transactions, Liam O'Mahony, Chief Executive, said:
"These are very well-managed businesses with excellent reserves and strong market positions, which represent a unique geographic fit with the Materials Division's existing activities. Integration of the businesses should facilitate substantial cost savings while strengthening the Division's market position and giving us significant new growth platforms in Kentucky, Virginia and Minnesota.”
Contact CRH at Dublin 404 1000 (+353 1 404 1000)
|Liam O'Mahony ||Chief Executive |
|Myles Lee ||Finance Director |
|Éimear O’Flynn ||Head of Investor Relations |
|Maeve Carton ||Group Controller |