CRH's €6 billion bid to buy businesses that peers Holcim and Lafarge have put on the block as part of their merger could transform the Irish building materials giant if it succeeds, according to stockbroker Davy.
Holcim and Lafarge agreed to merge last year to create the world’s biggest cement maker, with sales of $44 billion, but must dipose of some assets before regulators will let the deal go ahead.
CRH is slightly favoured in a two-horse race against a syndicate led by private-equity player, Blackstone, to buy the businesses, which are spread across Europe, the Americas and Asia.
Davy analysts Barry Dixon and Robert Gardiner say that the "proposed acqusition would be transformative for CRH" and could add 16 per cent to its earnings before any savings that could result from the deal are factored in.
“This would be a game-changing deal for CHR,” they say in a note released on Friday. “The accretion to profitability is likely to be substantial.”
They say that as well as acquiring businesses with strong market positions, the transaction should also deliver savings for operations in north America and western Europe.
At the same time, they add that it would help fulfil CRH chief executive, Albert Manifold's ambition to invest in cement manufacturing in emerging markets, as the deal includes businesses in eastern Europe, Brazil and the Phillipines.