8-K

CRH PUBLIC LTD CO 8-K Report (Mar 23, 2004)

Filed March 23, 2004For Securities:CRH

Summary

CRH Public Limited Company (CRH) announced on March 22, 2004, a significant strategic move with its agreement to acquire a 49% equity stake in Secil, a major Portuguese building materials producer. Secil is a subsidiary of the publicly quoted Semapa and the deal involves a joint management control agreement between CRH and Semapa. This acquisition is valued at an enterprise value of EUR900 million for 100% of Secil, with CRH paying EUR372 million in cash for its stake, resulting in EUR45 million of goodwill. The transaction, expected to close by mid-year, is subject to due diligence and European Commission approval. Secil possesses substantial operations in Portugal, including three cement plants, concrete plants, and quarries, as well as a cement plant in Tunisia. Despite facing a challenging market in Portugal in 2003, with declining cement demand and construction activity, Secil generated consolidated sales of EUR418 million and EBITDA of EUR123 million. CRH's CEO, Liam O'Mahony, highlighted the strategic opportunity to gain a leadership position in the Portuguese cement market and expand into Tunisia and Lebanon, anticipating a recovery in the Portuguese economy.

Key Highlights

  • 1CRH has agreed to acquire a 49% equity stake in Secil, a major Portuguese building materials producer.
  • 2The acquisition involves a joint management control agreement with Secil's parent company, Semapa.
  • 3The enterprise value for 100% of Secil is set at EUR900 million, with CRH's cash consideration for its stake being EUR372 million.
  • 4Secil operates significant cement production, readymixed concrete, and quarrying assets in Portugal and a cement plant in Tunisia.
  • 5In 2003, Secil reported consolidated sales of EUR418 million and EBITDA of EUR123 million, despite a downturn in the Portuguese construction market.
  • 6The transaction is expected to close by mid-year, pending due diligence and regulatory approvals.

Frequently Asked Questions

The acquisition is considered a unique strategic opportunity for CRH's Europe Materials Division. It aims to establish a leadership position in the Portuguese cement market, which has historically high per capita consumption, and also opens development avenues in Tunisia and Lebanon. The partnership with Semapa is expected to leverage combined expertise and resources to grow Secil's businesses.

The transaction is based on an enterprise value of EUR900 million for 100% of Secil. CRH will pay EUR372 million in cash for its 49% stake, which is expected to result in EUR45 million of goodwill. The deal is subject to assumptions regarding net debt at closing, estimated at EUR140 million.

Secil has substantial operations in Portugal, including three cement plants (4.2 million tonnes capacity), 41 readymixed concrete plants, and 6 hard rock quarries. It also operates a cement plant in Tunisia with 1.1 million tonnes capacity. In 2003, Secil produced 4.3 million tonnes of cement and 2.2 million cubic metres of readymixed concrete. Despite a difficult market in Portugal in 2003, Secil reported consolidated sales of EUR418 million and EBITDA of EUR123 million.

The acquisition is subject to the satisfactory completion of the due diligence process and obtaining approval from the European Commission. CRH expects the transaction to close by mid-year.