CRH looking for a private-equity partner?

Does CRH, as has been speculated this week, really have the appetite to swallow a €6 billion-plus portfolio of assets that will be shed by Lafarge and Holcim as part of their mega $55 billion tie-up? Surely not.

The Irish company’s market capitalisation is currently in the region of €13.3 billion, so it would be a chunky deal for it to take on alone. In recent years, the always-acquisitive CRH has tended to proceed will small, bolt-on purchases, so a €6 billion bite looks completely at odds with that strategy.

The assets are across France, Germany, Austria, Hungary, Romania, Serbia, the UK, Canada, the Phillipines, Mauritius and Brazil. CRH is already preparing to divest assets in some of those locations, notably the UK, having overpaid for them during the boom years.

So it would seem to make little sense for it to step back into the fray to buy more in the same locations. Some of the assets for sale, notably in Serbia, Hungary and Romania, would be particularly attractive to CRH, which also has a plant in troubled Ukraine. It likes eastern Europe. The others look a bit exotic for a company not reknowned for diving headlong into developing markets just for the sake of it.

According to Reuters, four private equity consortia are already lining up bids for the entirety of the Lafarge-Holcim assets. It would make much more sense for the merging companies to offload them as a job lot, as opposed to piecemeal – less advisors fees, less dealings with regulators, less hassle.

If CRH wants to take a bite at the eastern European assets, it may have to form its own consortium for the entire portfolio. Davy mused yesterday that CRH could join up with a private equity partner to make a bid, if a job lot is how the process goes.

“A CRH bid for the entire package is highly unlikely in our view. A joint bid with private equity makes much more sense.”

Whatever happens, the situation provides Albert Manifold, (inset) in his first year as CRH chief executive and already cleaning up after the boomtime sins of his predecessors, the chance to really make his mark.