CRH has continued its expansion into the US with the acquisition of two companies, Dolomite Group and Northern Ohio Paving Company, for up to €179.2 million (£141 million). There is an initial payment of €166.7 million plus deferred payments with a net present cost of €12.5 million.
More than half of the group's sales and profits are generated in the US and these acquisitions will further increase its presence in that market.
Mr Tom Hill, chief executive of the Oldcastle Materials Group, the CRH subsidiary making the acquisition, said the deals "are very much in line with the ongoing development strategy of the group to build on existing regional platforms.
Dolomite strengthens the group's existing strong position in New York state, while Northern Ohio paving is an excellent fit for the Shelly company, which was acquired for $350 million in February this year".
The two companies had combined sales of $131 million and adjusted trading profits before depreciation of $29 million in 1999. Depreciation amounted to $6 million. The initial consideration is on a pre-tax multiple of 7.2. Mr Myles Lee, general manager- finance, said the acquisitions would add 1.5 cents to earnings per share on the historic figures. However, the companies are showing good profit growth this year, so the benefits should be greater.
CRH spent €1.3 billion on acquisitions in 1999. Spending has amounted to around $600 million so far this year, about the same level as in 1999. Apart from the latest two acquisitions, CRH acquired the roof-light interests of Yule Catto & Company plc, a British manufacturer of speciality chemicals and building products, for €77 million, and the Shelly Company, an Ohio-based aggregates group, this year.
The group will be announcing a number of small acquisitions next month; last year these amounted to some €200 million.
Mr Lee said there should be more add-ons to the two new companies, particularly to Northern Ohio Paving.
Asked to comment on speculation that the group was teaming up with Australia's CSR in a $750 million bid for the US assets of Tarmac which would see CRH take control of the British group's assets in Florida, he would not comment.
Dolomite, founded in 1920, is based in Rochester, New York, and produces aggregates, asphalt and ready mixed concrete. CRH said it owns some 320 million tons of reserves and operates eight quarries, two sand and gravel sites, thirteen asphalt plants and six ready-mixed concrete plants. Last year it produced 4.7 million tons of aggregates, 1.3 million tons of asphalt and 0.4 million cubic yards of ready-mixed concrete.
The takeover extends the operations of the Oldcastle group into western New York state. CRH said that while growth in construction activity in this area is expected to be flat in the medium term, "forecast increases in highway activity in the region are underpinned by increased federal spending".
Northern Ohio Paving, established in 1954, is headquartered in Twinsbury north-eastern Ohio. It has access to almost 60 tons of aggregate reserves, operates two crushing facilities and has three asphalt plants at three locations. Last year it produced 0.9 million tons of aggregates and 0.8 tons of asphalt.
