CRH offers to buy Sydney-listed Adbri in €1.3bn deal as it boosts Australian presence

CRH has moved to significantly increase its presence in Australia by coming together with the main shareholder in cement group Adbri to make a takeover offer that values the business at the equivalent of €1.3 billion.

Adbri, formerly known as Adelaide Brighton, is a leading building materials business in Australia, listed in Sydney. Barro already owns 43 per cent of the company and would retain that level of a stake at the end of the transaction.

CRH, which already has a 4.6 per cent interest in Adbri through financial derivatives, would end up with a total 57 per cent stake should the deal go through. It said that the deal would “strongly complement” its existing Australian business.

The proposed deal marks the first big move by CRH outside its core European and North American markets since it acquired businesses in the Philippines and Brazil eight years ago under the €6.5 billion takeover of an international portfolio of assets from Lafarge and Holcim as the two European companies sought to win regulatory approval for their own merger.

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More recently, CRH has been a seller of businesses outside of its focus markets. It sold its Brazilian cement business for the equivalent of €184.4 million in 2020, a year after selling its 50 per cent stake in an Indian joint venture. CRH also reportedly weighed a sale of its interests in the Philippines four years ago, however, it remains in that market.

“We have held a long-term interest in the Australian construction materials market, which has attractive attributes including stable market dynamics and positive growth prospects, similar in nature to the southern United States and central and eastern Europe where we have a significant presence,” said CRH chief executive Albert Manifold.

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“Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates. With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us. It is the next logical step for CRH to expand our existing presence in Australia, where we have been operating for 15 years.”

Adbri recently announced that its 2023 underlying earnings before interest, tax, depreciation and amortisation (ebitda) is expected to be in a range of between 310 million and 315 million Australian dollars (€190 million to €194 million). The offer puts the enterprise value of Adbri at nine times ebitda, CRH said.

“CRH’s operational capabilities in cement, ready-mix concrete and aggregates, as well as its long-standing presence in Australia – through its infrastructure products and construction accessories businesses – will make it, in our view, a strong owner of Adbri,” said Ross Harvey, an analyst with Davy, adding that the deal “opens up the prospect of further development in the Australian market”.

As of the end of November, CRH had spent about $700 million (€640 million) on 16 strategic bolt-on acquisitions. It is also on track to spend $4 billion this year on share buy-backs and dividends.

The Irish corporate giant forecasts that its ebitda will increase this year to $6.3 billion from $5.6 billion in 2022, with most of its earnings currently being made in the US.

CRH delisted from the Dublin market in September as part of a rejig that saw its main stock market quotation move from London to New York.

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