CRH’s Ash Grove deal faces rival bid from Summit Materials
Last-minute counterbid materialised on Friday from group founded by former CRH executive
CRH’s shares fell 1.83 per cent to €30.915 in Dublin on Friday following the news. Photograph: Brenda Fitzsimons
Building materials group CRH looked set to buy Ash Grove Cement for $3.5 billion (€2.9 billion), but a last-minute counterbid for the company materialised early on Friday.
Summit Materials, a Colorado-based manufacturer founded by Tom Hill, the former head of CRH’s US division, is understood to have made Ash Grove a non-binding offer between $3.7 billion and $3.8 billion.
CRH’s shares fell 1.83 per cent to €30.915 in Dublin on Friday following the news, knocking €480 million off the company’s value. About 1.8 million of its shares changed hands.
Ash Grove confirmed that an un-named third party had approached it. The US company said that its board decided to “engage with such third party” as its approach could result in a better offer than CRH’s.
It added that there was no guarantee that an offer would materialise or that it would better that tabled by the Irish company.
Ash Grove said that it would allow up to October 20th for competing offers to CRH’s.
It also announced that shareholders would get the opportunity to vote on the CRH offer at an extraordinary general meeting on November 1st.
Under the terms agreed with CRH, Ash Grove would have to pay the Irish group $131 million should it sell to a rival bidder. CRH is also Ash Grove’s biggest customer.
Profits of $215m
The existing relationship between the two businesses is understood to be part of the logic behind the deal. Both CRH and Ash Grove are likely to save money by joining forces.
Ash Grove is one of the biggest cement producers in the US. Last year it earned profits of $215 million and had assets of $2.5 billion.
Mr Hill left his role at the head of CRH’s North American materials division, Oldcastle, to set up Summit in 2008.
He served on the Irish group’s board for six years, beginning in 2002, and was once tipped as a future chief executive.
Summit Materials is listed on the New York Stock Exchange and is valued at about $5 billion.
CRH confirmed on Friday that it has agreed to buy Ash Grove for $3.5 billion and noted that the period for obtaining shareholder approval had been extended.