CRH, the building materials group, continues to expand in the US with the acquisition of four groups for up to $37.8 million (£25.9 million). This follows the acquisition of CPM Development Corporation last week for $94 million. CRH has spent £136 million on acquisitions so far this year. The latest acquisitions include RSI Wholesale, American Pacific Supply, Builders Supply and the assets of A&R Supply. Their combined sales in 1996 amounted to $115 million which generated trading profits of $5.3 million. The net assets are being purchased at a premium and the goodwill will amount to $16 million.
The acquisitions add 23 branches to the group's Oldcastle Distribution Group network in the US. RSI, based in Grand Rapids, Michigan, has five branches in Michigan, two branches in Indiana and one in Illinois. With Allied Building Products (it was acquired last year), RSI will be the largest roofing distributor in the Michigan market, according to CRH. American Pacific Supply is a two-branch roofing distributor in western Washington. This acquisition, said CRH, strengthens Allied's leadership position in the region.
The assets of A&R Supply consist of four branches in northern California. They provide Allied with "an excellent position from which to grow in the San Francisco Bay area", according to Mr Michael Lynch, senior vice-president of Oldcastle.
He noted that when Allied was acquired the group's strategy was to use it as a platform in the rapidly consolidating roofing and siding distribution sector in the US. The latest acquisitions, together with the two smaller deals announced in early July, are "very much part of this strategy, increasing the national network of branches while consolidating the group's leadership positions in certain key regional markets". The enlarged distribution group in the US will have annual sales of $650 million with 94 locations in 28 states. CRH recorded a modest 2 per cent rise in pre-tax profit to £65.7 million in the six months ended June 30th, 1997. Lower profits from the US were the culprits.
