CRH continues US expansion with $1.3bn acquisition of Apac

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The Irish building materials group CRH unveiled its $1.3bn (£690m) acquisition of America's Ashland Paving and Construction (Apac) yesterday.

The deal is to be financed by debt and is aimed at increasing CRH's exposure to infrastructure spending in the US and to expand its geographical reach.

CRH, which operates across 32 states, is already the biggest supplier of asphalt in America, the fourth-biggest supplier of aggregates and among the 10 largest makers of ready-mixed concrete. More than half the group's sales are derived from the US, where spending on construction grew by almost 9 per cent last year.

Liam O'Mahony, CRH's chief executive, characterised the Apac acquisition, its biggest, as a "major milestone" in his company's US development. Atlanta-based Apac employs about 9,700 workers and operates across 14 states including Oklahoma, Arkansas, Kansas, Missouri and Mississippi.

In the year to the end of June, Apac registered sales of $2.9bn and earnings before interest, tax, depreciation and amortisation (EBITDA) of about $220m.

Apac's president Kirk Randolph, who has been with the business for more than two decades, will join CRH's Americas Materials division under Mark Towe.

Dublin-based CRH, which boasts that it can afford to spend as much as €2bn (£1.4bn) on acquisitions annually, has long pursued growth by takeovers. Over the first six months of this year, the company has already spent about €800m on buying others.

The deal, which is slated to deliver annual cost savings of $20m immediately and of $40m within three years, has been given competition clearance.

Analysts applauded the takeover. Stuart Draper, at Dolmen Securities, said: "There's likely to be earnings upgrades in the aftermath of this deal. It should also provide fuel for some strong earnings growth in the US."

He has set a target price of €30 on the shares and again urged clients to buy. CRH shares advanced 23 cents to €25.53, valuing Ireland's most acquisitive company at almost €13.8bn.