August 27, 2015 / 8:41 AM / 3 years ago

CRH completes deal push with $1.3 billion purchase of U.S. glass firm

DUBLIN (Reuters) - Ireland’s CRH (CRH.I) (CRH.L) bought U.S. glazing products manufacturer CR Laurence for $1.3 billion on Thursday and said this would be its last big acquisition for the next year or two.

CRH this month completed a 6.5 billion-euro ($7.35 billion) acquisition of assets that rivals Holcim and Lafarge had to sell to win regulatory approval for the newly merged LafargeHolcim LHN.VX, the world’s biggest cement maker.

Family-owned CR Laurence, which sells everything glazing contractors need apart from the glass that an existing division of CRH already provides, will be acquired debt-free and through the building supplies group’s existing financial resources.

Already the leading producer of asphalt and third largest supplier of construction aggregates in the United States, CRH will pay a multiple of 8.6 times earnings before interest, tax, depreciation and amortization (EBITDA) when adjusted for expected synergies, Davy Stockbrokers wrote in a note.

Shares in CRH were up 4.4 percent to 1,890 pence by 0820 GMT, the top riser on the FTSE 100 .FTSE

“It makes us by a country mile the number one in this sector,” CRH chief executive Albert Manifold told Reuters.

“It’s a $25 billion sector in the U.S. and has got high growth dynamics given what we’re seeing in the residential and non-residential markets,” he said.

“In the near term, our focus will absolutely be on the integration of these two deals in the next 12-24 months. You will expect to see the small bolt-on deals but they will be funded entirely by any business we sell in that time.”


The CR Laurence sale was run as an auction, attracting interest from private equity funds and companies in the industry, said Lloyd Greif of investment bank Greif & Co, which advised the seller.

“For them (CRH) to close two billion dollar-plus transactions within months is pretty aggressive,” Greif said. “But CRL is a hand in glove fit.”

CRL has forecast sales of $570 million and core earnings (EBITDA) of $115 million in 2015, excluding annual synergies of $40 million which CRH expects to net from the deal.

CRH embarked on its own disposal plan last year, one of the first steps Manifold took as the new CEO, and said on Thursday that over half of the 1.5 to 2 billion euros worth of net assets identified for sale had been offloaded.

The Dublin-based group reported first half EBITDA of 555 million euros, a 29 percent year-on-year excluding one-off items.

It had guided for a 10 percent increase and said on Thursday that it expected earnings in its busier second half to show “good progress” on the 1.1 billion euros generated last year, which Manifold said reflected CRH’s focus on a stabilizing European market and strongly performing U.S. businesses.

“That strategy is really going to be a key strength going forward given the volatility we’re seeing in emerging markets. I know China’s in vogue this week, but it was Brazil last week and the week before that it was Russia,” Manifold said.

Additional reporting by Freya Berry in London; Editing by Mark Heinrich and Keith Weir

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