CRH acquires SE Johnson in US for €154 million

CRH's US materials division, Oldcastle, has purchased the Ohio-based SE Johnson group for $177 million (€154 million), writes Siobhán Creaton

SE Johnson is based in Toledo and is a leading aggregates and asphalt producer with operations in northern Ohio, south-eastern Michigan and north-eastern Indiana markets.

CRH is paying a total cash consideration of $217 million, but when anticipated sales of non-core assets worth $40 million are included the net cost reduces to $177 million.

Announcing the acquisition yesterday, Oldcastle chief executive, Mr Tom Hill, said the deal would offer considerable scope for the speedy realisation of value-adding synergies. "This deal is consistent with the material division's strategy to enhance vertical integration of its activities in the mid-west," he said.

SE Johnson was founded in 1929 and employs 1,300 at peak capacity. It has 600 million tons of permitted reserves and produced 12.7 million tons of aggregates and 2.6 million tons of asphalt in the year to the end of December 2002.

After depreciation of $10 million, the company reported trading profits of $18 million last year on sales of $272 million.

Once the acquisition has been completed, CRH plans to reduce its large exposure to non-paving related highway and bridge construction and to dispose of certain non-core assets.

It will then be integrated into the Shelly Group in Ohio and the Thompson-McCully firm in Michigan, which were acquired by the Irish building materials group in recent years.

CRH believes the acquisition is a unique geographic fit with its existing activities and that this should facilitate significant cost savings while strengthening its market and reserves in the mid- west region. The company has spent €440 million on acquisitions in the current year.

Yesterday analysts said the acquisition looked attractive and should have an incremental effect on earnings in a full year.