CRH will pay a net $74 million (€81.3 million) in cash for the Utah and Alabama operations of US Aggregates, halving the originally announced cost of the deal through a simultaneous sell-off of non-core operations.
The Oldcastle Materials Group in the US will be expanded through the addition of an integrated construction materials business in Utah and a major quarry in Birmingham, Alabama. The deal, involving no goodwill, is expected to close on May 29th and will bring CRH spend on acquisitions so far this year to €460 million.
CRH shares closed six cents ahead at €19.16 yesterday. General manager, finance Mr Myles Lee said the deal would be immediately earnings enhancing and when cost savings and other efficiencies were implemented, the Utah operation was expected to generate trading margins in the mid teens within about a year. The quarry in Alabama was consistently profitable, he added.
In March, CRH said Oldcastle had agreed to acquire the US Aggregates operations in Utah, Arizona, Nevada, Tennessee and Alabama for $140 million. At the time the group did not disclose any intention to dispose of some of the assets. "Our main objective was the assets in Utah and we had to make a bid for the entire operation. Then we got attractive offers for the other businesses and decided to take them," Mr Lee said.
Because US Aggregates had filed for Chapter 11 bankruptcy protection, the deal was subject to certain conditions including a competitive bid for the assets and the approval of the bankruptcy courts. CRH put in an agreed bid for the assets but then agreed a disposal of the non-core operation which has almost halved the cash cost of the deal to CRH. Completion of the disposals will coincide with the completion of the acquisition.
The acquired operations generated total sales revenue of $76 million in 2001 comprising 6.1 million tons of aggregates, 1.1 million tons of asphalt and 0.2 million cubic yards of readymixed concrete. Oldcastle chief executive Mr Tom Hill said the deal would augment its production capacity in the growing Salt Lake City area and extend its activities into the Cedar City/St George region.
