CRH to bid for Korean cement maker

CRH may bid for Tongyang Cement and Energy, the second largest cement producer in South Korea, a mere four months after announcing its biggest ever deal.

Four months after announcing the biggest deal in its history, CRH soared amid speculation it will make a bid for a Korean cement company.

Rumours were rife in London’s City on Thursday that the Irish building materials company had hired Goldman Sachs to bid for Tongyang Cement and Energy, the second largest cement producer in South Korea. A 74pc stake in the distressed Korean business was put up for sale in April and analysts have said CRH could pay up to $900m for it. Interestingly, the bid speculation came just weeks after CRH legally agreed terms of its acquisition of assets from Holcim and Lafarge for €6.5bn. The deal, which is expected to be completed in the second half of the year, will turn it into the world’s third-biggest building materials supplier.

Within the Holcim-Lafarge deal lies a key piece of information which has helped the bid chatter; Lafarge has a presence in South Korea – something traders were keen to point out. Many said they would be “unsurprised”, if CRH didn’t make a bid for that reason, believing the Irish firm will “continue to be opportustic”.

In May, CRH issued a strong update, including like-for-like sales growth of 8pc in the US. However, sales growth in Europe slipped 2pc. Meanwhile, Robert Eason, of Goodbody Ireland, believes CRH “has the scope to continue to take part in M&A”, pointing to comments made by Albert Manifold, the chief executive.

“He noted the acquisition pipeline was quite strong across the businesses,” Mr Eason said. The stock closed up 43p, or 2.3pc, at £18.85.

Source

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