Shares in CRH, the world's second-biggest maker and distributor of building materials, fell in Dublin trading after a Sunday Telegraphreport that its management is considering a €1 billion ($1.28 billion) rights offering.
CRH dropped as much as 5.8 per cent to €17.67 and was trading down 5.2 per cent at €17.77 as of 12:26pm local time.
The Dublin-based company is considering selling shares, the Telegraph said yesterday, without saying where it obtained the information. CRH external spokesman, Robin Walker at Finsbury, declined to comment.
The Irish supplier of asphalt and concrete slabs may be looking to raise money from investors, anticipating it can take advantage of rivals in financial distress after a construction slump spread to Europe from the US, analysts at Bloxham Stockbrokers in Dublin said in a note today.
CRH, which gets half of sales from the Americas, became Ireland’s most acquisitive company by spending a record €2.2 billion in 2007.
“With CRH competitors faced with asset disposals at the worst point in the cycle for pricing, the Irish based group has a superb opportunity to acquire long-tailed assets at knock down prices,” Bloxham analysts, including Kevin McConnell, said in their report.
CRH’s last rights offering in 2002 was done on a pre-emptive basis at a time when it did not appear to need capital for any short-term purposes, the Bloxham analysts said.
“CRH bolstered its balance sheet using a deeply discounted rights issue, surprising the market, but reinforcing its buying power when asset prices were cheap,” Mr McConnell and colleagues said.
Switzerland’s Holcim, the world’s second-biggest cement maker, may look at a similar move, Tobias Woerner, an analyst at MF Global Securities in London, said in an email.
Separately, a US economic stimulus package may deliver a smaller boost to the country’s building materials industry than first anticipated, Goodbody Stockbroker analyst Robert Eason said in a note today.