BUILDING materials group CRH has spent $87 million (£55 million) in a further expansion of its US operations. It has bought Jack B. Parson Companies, a US aggregates, asphalt and paving company based in Utah.
This is its first acquisition this year and it fits in well with Staker Paving and Construction Company, another Utah based company in the same business, which was acquired last July for $25.1 million.
CRH has now built up a strong regional base outside its existing north eastern operations in the US.
Mr Myles Lee, CRH's general manager (finance), said Parson was "very complementary with Staker, with very little overlap". CRH, he added, would be looking for further growth in this area. The business still remained very fragmented, according to Mr Lee.
Parson has its headquarters in Ogden, Utah, 35 miles north of Salt Lake City. Staker has its headquarters in Salt Lake City.
CRH approached Parson shortly after the Staker acquisition and talks have been going on since then. It had a "very consistent record", said Mr Lee.
Parson generated a profit before interest of $15 million on sales of $109 million in 1995. This puts the consideration on a profit multiple of 5.8.
The consideration will be paid over a five year period with deferred payments forming less than 10 per cent of the total. The deal is earnings enhancing and should add about 1p to historic earnings per share, Mr Lee said.
The assets purchased equate to the consideration so there will be no goodwill.
In line with CRH's strategy, the existing management, led by Mr Jack B. Parson jnr, will continue to operate the business but this will now form part of the Mountain States - Division of CRH's materials group.
Parson operates an aggregates, asphalt, ready mixed concrete and paving business in northern Utah, and an aggregates, asphalt highway construction and contract hauling operation in southern Idaho. There is also a small asphalt and paving operation in Elko, Nevada.
Parson is particularly strong in aggregates in both markets with 29 sites and aggregates reserves of more than 90 million tons. It produced 3.9 million tons of aggregates in 1995, so its reserves will last a long time.
Salt Lake City is a growing area with an inflow of new residents. Population growth is around to per cent, well above the average of around 1 per cent for the US. Construction activity is expected to benefit from a number of infrastructural projects over the next few years which will be boosted by developments associated with the holding of the Winter Olympics in 2002.
CRH's enlarged materials division in the US now has over 100 operations in 10 states. They have an annual output of 18 million tons of aggregates, 8 million tons of asphalt and 1.2 million cubic yards of ready mixed concrete.
Annual sales will amount to $450 million of which $150 million will be generated by the Mountain States Division.
