CRH agrees to sell US steel and wire company for €37m

QUOTED BUILDING materials giant CRH is selling one of its US businesses for €37 million.

The Irish company said yesterday that it had agreed to sell Texas-based Ivy Steel and Wire to rival Insteel Industries, one of the biggest players in the sector, for $51 million (€37 million).

Ivy makes steel and wire reinforcements for concrete products and had sales last year of $104 million. CRH acquired the operation when it bought MMI Inc in April 2006.

As the Irish company intends taking an impairment charge related to MMI in this year’s accounts, the deal will result in no material gains or losses for the group.

In a statement earlier this month, CRH predicted that it would take impairment charges of €100 million this year related to various aspects of its business.

It expects that full-year pretax profits will be in the region of €520-€550 million, while earnings should reach €1.6 billion.

The Ivy Steel and Wire announcement comes just days after CRH announced that it had agreed to sell its European insulation businesses to another Irish group, Kingspan, for €120 million.

That deal will be completed early next year, assuming that it gets regulatory approval.

CRH chief executive Myles Lee said the group was glad that Ivy Steel and Wire was being sold to a strong industry player.

The news of the deal sparked some interest from investors early yesterday. CRH’s price rose 1.65 per cent to €15.08 in morning trading in Dublin. However, it fell back later in the day to close 0.3 per cent down at €14.788.

CRH is also in the process of spending €126 million on increasing its stake in German distributor, Bauking, to 98 per cent. It already owns 48 per cent of Bauking, which is the leading builders’ merchant and DIY group in northern Germany.

It has 128 branches and last year generated earnings of €35 million from sales of €747 million. When it announced the purchase this month, CRH said it would strengthen its position in the German market and provide it with a platform for growth.