CRH eyes €400m Russian cement stake

BUILDING MATERIALS group, CRH, may be close to doing a deal with Oleg Deripaska, the Russian billionaire whose interests include a stake in the Aughinish Alumina plant in Co Limerick.

Reports yesterday said that CRH could be close to buying a majority stake in a Russian-based cement manufacturing business from Mr Deripaska.

The Irish group did not comment yesterday, but following the publication of its interim results last month, it did say that it was looking at acquisition opportunities in Russia.

It was suggested that it is interested in buying up to 75 per cent of the cement business from Mr Deripaska. Such a deal could be worth more than €400 million. The overall business is said to be worth €550 million.

CRH already has large cement manufacturing businesses in eastern Europe, including in Poland and the Ukraine. It already supplies the St Petersburg market from its operations in Finland.

Barry Dixon, analyst with Davy stockbrokers, pointed out yesterday that while the Russian cement market is fragmented, it looks set for a period of future growth.

He also noted that CRH has the balance sheet to complete such a deal.

The group has more than €1 billion in cash and a low debt to earnings ratio.

Mr Deripaska is one of Russia’s richest men. Forbes recently estimated his worth at around $10 billion. He is chief executive of Basic Element, which has investments across a number of sectors, including manufacturing, construction, aviation and financial services.

One of its key assets is a stake in UC Rusal, owner of the Aughinish Alumina plant on the Shannon Estuary. The plant is the largest alumina refinery in Europe.

The facility employs around 450 people and processes 1.9 million tonnes of alumina a-year. Alumina is used in the production of aluminium metal. UC Rusal is the product of a merger of the aluminium interests of Russian Aluminium, SUAL and Glencore.

CRH recently reported that pretax profits more than trebled in the first six months of this year to €95 million from €25 million during the same period in 2010.

The group spent more than €160 million on 20 acquisitions during the first half of the year. CRH regularly buys smaller businesses that are easily absorbed into the larger group.