CRH may seek to sell US business

THERE IS speculation that building materials giant CRH is seeking to sell its US distribution business.

Goodbody Stockbrokers reported yesterday that specialist news service Mergermarket reported earlier this week that the Irish company may be considering the sale of its US distribution business, which operates largely under the Allied Building Products brand.

According to Goodbody, such a sale could raise between €730 million and €1 billion, which CRH could use to buy other businesses.

The Irish group has a long history of buying up and absorbing smaller rivals, and earlier this year raised cash from shareholders, some of which will be used to build up its acquisitions war chest.

The US distribution business is expected to have sales of $1.8 billion (€1.2 billion) this year, about 7 per cent of total group turnover, according to Goodbody’s note, written by analyst Robert Eason.

The division is likely to generate earnings of $55 million, and Mr Eason says margins from the division, which have been between 3 per cent and 7 per cent, are among the lowest in the group.

The business sells and distributes roofing materials, siding products, wallboard and ceilings. Goodbody describes the division as fragmented, and says a sale could make sense.

The firm also points out that the US highway building programme, part of the stimulus package designed by US president Barack Obama, has been progressing at a faster-than-expected rate.

That news is positive for CRH, as it is the biggest producer of asphalt, which is used to surface roads, in the US.

CRH did not comment yesterday on the Mergermarket speculation.