International building materials group CRH (CRH) is to buy Ash Grove Cement for $3.5bn (£2.6bn). The deal is expected to be completed by the end of 2017, subject to regulatory and shareholder approval.
Ash Grove operates eight cement plants across eight US states as well as 52 ready-mixed concrete plants, 25 sand and gravel plants and 20 limestone quarries, and counts CRH as its largest customer. In 2016 it reported gross assets of $2.5bn and pre-tax profits of $215m, and in that year it shipped 8.2m tons of cement.
The purchase price will be met from existing resources, boosted recently by the €2.2bn (£1.9bn) sale of its American distribution business, giving CRH over €4bn to spend on potential acquisitions. Buying Ash Grove makes a lot of sense as the two businesses will easily complement each other, whereas the distribution business was perceived as having a lack of growth opportunities.
Prior to this, CRH’s European heavyside business also snapped up Fels, a German lime and aggregates business for €600m. With nine production locations across Germany, the Czech Republic and Moscow, Fels has a leading market position in the lime market, with 1bn tonnes of high quality limestone reserves. Integrating this with CRH’s existing lime business will make it the second largest operator in Europe. These two transactions are in addition to the 13 acquisitions made during the first six months of 2017 costing €632m, and disposals of €145m.
