CRH buys three US firms in deals worth €344m

Building materials giant CRH is spending more than €340 million acquiring three companies that it says will boost its US business.

The company yesterday said it had agreed to buy the three businesses, in various parts of the US, for a combined total of €344 million. The cost comprises cash and assumed debt, totalling €301 million and deferred payments of €43 million.

CRH finance director Myles Lee said that the bulk of the price paid will be in cash.

The biggest of the three purchases is the quarrying, asphalt and paving business of the Mountain Group of companies, which is based in the Appalachian regions of Kentucky, Virginia and West Virginia.

CRH has also bought 50 per cent of Bizzack, a specialised heavy construction affiliate of Mountain. The company undertakes rock clearing and cutting, and earth moving.

There is big demand for these services in the Appalachian region.

In a statement yesterday, CRH said that the Mountain purchase represented a big expansion in the eastern Kentucky/Virginia region.

That region of the US is facing an increase in highway construction on the back of a federal road-building programme. Activity in that sphere declined last year after a peak in 2003, but is expected to recover.

CRH has also bought Southern Minnesota Construction (SMC), in the midwest, marking an expansion into new territory for the Irish group. Its statement said that SMC would be a good fit with an existing business in Iowa.

SMC is another producer of quarried stone, known as aggregates, and asphalt.

The company said that it was not in a position to break out the individual price paid for each of the three businesses, as confidentiality agreements govern the publication of this information.

Last year, the three had combined sales of $294 million (€244.7 million) and earnings before interest, tax and write-offs of $52 million.

According to Mr Lee, this brings to more than €700 million the combined total CRH has spent on acquisitions this year. He said that it was likely to complete smaller, bolt-on purchases by the end of 2005.

Commenting on the purchases, chief executive Liam O'Mahony said the companies were "well managed businesses with excellent reserves and strong market positions".

CRH's share price increased by 3.3 per cent to close at €21.54 in Dublin last night.