CRH offloads European distribution business in EUR 1.64bn deal
Building materials group CRH has reached agreement to divest of its Europe distribution business to private equity funds managed by Blackstone, it announced on Tuesday, for an enterprise value of €1.64bn (£1.48bn), payable in cash.
The FTSE 100 company said the transaction remained subject to regulatory approval.
It explained that the business comprised its entire general builders merchants business in Europe, including its sanitary heating and plumbing business.
The division supplies building materials to professional builders, specialist contractors and do-it-yourself customers through a network of local and regional brands across six countries in Western Europe.
In 2018, the business generated pro forma EBITDA of €155m on pro forma sales of €3.7bn, with profit before tax for the year amounting to €124m and gross assets at year-end totalling €1.9bn.
The divestment followed a “comprehensive” strategic review of the business over the last several months, which the board said considered all options to maximise value for shareholders.
It concluded the exit from CRH’s distribution businesses across the group, creating what the directors described as a “simpler and more focussed” business.
The group said its strategy of actively managing its portfolio for higher growth, more sustainable returns and efficiently allocating capital to maximise shareholder value had resulted in its decision to divest of the business at an “attractive” valuation.
CRH said the proceeds from the divestment would be used for general corporate purposes, value creating acquisitions and capital returns to shareholders through our ongoing share buyback programme.
“The transaction announced today demonstrates the continued execution of CRH's strategy of creating value for our shareholders through active portfolio management, the efficient allocation of capital and creating a simpler and more focussed group going forward,” said chief executive officer Albert Manifold.
“We wish our colleagues in Europe distribution every success as they enter this new phase of their development.”