CRH Said to Plan $3 Billion Oldcastle Building Envelope Sale
CRH Is Said to Plan $3 Billion Oldcastle Building Envelope Sale
(Bloomberg) -- CRH Plc, the world’s second-biggest building material maker by market value, is planning a sale of its Oldcastle Building Envelope unit that could fetch more than $3 billion, people with knowledge of the matter said.
The Irish company is working with advisers and recently started reaching out to potential buyers, said the people, who asked not to be identified discussing confidential information. The U.S.-based unit is likely to attract interest from private equity firms, according to the people.
“We would very much like such a deal, as it would refocus the group around the heavy side and related products,” Stifel Financial Corp. analyst Tobias Woerner said in a note on Tuesday. There should be “good interest” from buyout firms and trade buyers, and one option would be to merge the business with U.S. peer Apogee Enterprises Inc., he wrote.
Oldcastle Building Envelope generates around $300 million in annual earnings before interest, taxes, depreciation, and amortization, the people said. The unit makes glass building products for projects ranging from storefronts and building entrances to shower enclosures and skylights.
Chief Executive Officer Albert Manifold has made several bolt-on acquisitions for CRH this year, including the purchase of Hancock Concrete Products LLC to expand its concrete pipe business in the U.S. Midwest. Any transaction would add to the $49 billion of deals targeting the building materials industry announced this year, according to data compiled by Bloomberg.
CRH shares gained 2.7% in London, valuing the company at about $40 billion. The Dublin-based company, which regularly prunes its portfolio, could still decide to keep the business, the people said.
“We suspect the group is biding its time waiting for the right opportunity, while it continues to buy back shares and possibly pay a higher, rebased dividend again,” Stifel’s Woerner wrote, when discussing what the cash could be used for given the company’s “very strong” balance sheet.
A representative for CRH declined to comment.
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