CRH announces materials investments in North America and the Middle East
10 August 2001
CRH, the international building materials group, announces two deals which extend the geographic reach of its North American and European Materials Divisions. In North America, the Oldcastle Materials Group has acquired Hallet Materials Inc. and Des Moines Asphalt & Paving Company Inc. for a consideration of US$74.9 million (euro 83.2 million) including debt acquired. In the Middle East, the Europe Materials Division has acquired a 25% stake in the Mashav group in Israel. The investment has been made by a new company established for this purpose, with CRH providing equity finance of US$47.8 million (euro 53.7 million) and FIBI Investment House plc providing a further US$97.1 million (euro 109.1 million) in preference capital that is non-recourse to CRH. As part of this transaction, CRH has secured a call option, exercisable before January 2004, to acquire an additional 25% of Mashav.
Commenting on these deals, Liam O’Mahony, Chief Executive, said: "These investments are very much in line with the strategy of both our Materials Divisions. In North America, the Hallet and Des Moines businesses provide an excellent platform for the Materials Group to enter the Iowa market which has good demand prospects underpinned by strong TEA-21 driven highway programmes. The investment in Mashav is our first move into the growing Middle East building materials market and represents another step in the Europe Materials Division’s strategy to build strong market positions in primary building materials in selected European and related markets to the east."
Hallet Materials and Des Moines Asphalt & Paving
Hallet Materials and Des Moines Asphalt & Paving were two unrelated companies under separate ownership and both headquartered in Des Moines. Hallet Materials is an aggregates company with over 80 million tons of permitted reserves. The company operates in the central and western Iowa markets and produced 4.4 million tons of aggregates in 2000. Des Moines Asphalt & Paving is central Iowa’s leading asphalt paving contractor, producing 0.53 million tons of asphalt in 2000. Combined adjusted trading profit of these two businesses in 2000, after depreciation of US$2.9 million, amounted to US$12.6 million on sales of US$57.3 million.
Mashav is the holding company for Nesher Cement, the sole producer of cement in Israel. From two state-of-the-art dry process production lines at its main facility in Ramla and a single semi-dry process plant at Har Tuv, Nesher supplies cement throughout Israel, the West Bank and Gaza. Both facilities have access to substantial raw material reserves. Nesher also operates a clinker grinding plant at Haifa where the company has permits to modernise its recently closed wet process clinker plant. In 2000, Nesher sold 5.7 million tonnes of cement.
Mashav, which also has a 50% interest in a logistics and transportation company, reported consolidated sales of euro 428.3 million and trading profits before depreciation of euro 123.6 million in 2000. Pretax profits amounted to euro 65.0 million after a depreciation charge of euro 48.0 million and interest expense of euro 10.6 million.