CRH enters binding agreement to acquire Adbri in Australia
- CRH plc is acquiring the remaining 57% of Adbri's ordinary shares for A$3.20 per share.
- The offer values Adbri at an equity valuation of A$2.1 billion (US$1.4 billion) on a 100% basis.
- The transaction also includes acquiring the approximately 53% of issued share capital not owned by Barro for A$1.1 billion (US$0.7 billion).
- Independent directors of the Adbri Board have recommended that shareholders vote in favor of the Scheme.
- The proposed transaction is subject to customary terms and conditions outlined in the Scheme Implementation Deed.
- CRH CEO, Albert Manifold, sees the acquisition as an opportunity for growth and development for their existing Australian business.
- None.
Insights
An acquisition of this magnitude in the building materials industry represents a significant consolidation move, which can have far-reaching effects on the market dynamics. The purchase of the remaining 57% of Adbri by CRH, at an equity valuation of A$2.1 billion, is a strategic expansion that aims to strengthen CRH's market position in Australia. This transaction not only enhances CRH's product portfolio but also provides an opportunity to leverage Adbri's established market presence and distribution network.
From a market research perspective, the acquisition could lead to increased market share for CRH and potential economies of scale. However, it's also important to consider the competitive landscape post-acquisition, as this could lead to regulatory scrutiny regarding antitrust laws and market concentration. Investors should monitor the integration process closely, as successful mergers can result in operational synergies, while poorly managed integrations can lead to value destruction.
When evaluating the financial implications of the acquisition, the offer price of A$3.20 per share needs to be scrutinized against Adbri's current and historical share price performance, financial health and growth prospects. The premium paid over the current market price can often reflect the acquiring company's confidence in the target's future performance and the synergies expected to be realized.
The transaction is expected to be funded through a combination of CRH's existing financial resources and new debt facilities, which could impact CRH's leverage ratios and interest coverage. Investors should assess CRH's post-acquisition balance sheet, as well as its cash flow statements to understand how the additional debt will be serviced and the impact on future dividends.
The acquisition has implications for the broader economic landscape within the building materials sector. The consolidation could signal underlying trends in the industry, such as the need for diversification of product lines or geographic expansion to mitigate risks associated with economic cycles. Furthermore, the acquisition could have a ripple effect on the supply chain, potentially affecting pricing and availability of building materials in the region.
It's also pertinent to consider the impact on employment and local economies, as mergers and acquisitions can lead to restructuring and changes in workforce requirements. Long-term, the success of the acquisition will depend on how well CRH integrates Adbri's operations and whether it can achieve the projected growth and market penetration while maintaining operational efficiencies.
Following due diligence over the past two months, we are pleased to announce CRH and Adbri have entered into a binding agreement under which CRH will acquire the remaining
A committee comprised of the independent directors of the Adbri Board has unanimously recommended that Adbri shareholders vote in favour of the Scheme in the absence of a superior proposal and subject to an independent expert concluding that the Scheme is in the best interests of Adbri shareholders. The proposed transaction is subject to customary terms and conditions as outlined in the Scheme Implementation Deed, a copy of which was published by Adbri today. The proposed transaction is expected to complete in 2024.
Albert Manifold, Chief Executive of CRH, said: “We are pleased to reach this important milestone in the potential acquisition of Adbri in partnership with the Barro family. Adbri is an attractive business with high-quality assets and leading market positions that complement our core competencies in cement, concrete and aggregates while creating additional opportunities for growth and development for our existing Australian business. We look forward to working with the Barro family over the coming years to enhance the long-term growth and performance of Adbri.”
About CRH
CRH (NYSE: CRH, LSE: CRH) is the leading provider of building materials solutions that build, connect and improve our world. Employing c.75,800 people at c.3,160 operating locations in 29 countries, CRH has market leadership positions in both
Registered Office: No 12965. Registered Office: 42 Fitzwilliam Square,
Forward-Looking Statements
This document contains statements that are, or may be deemed to be, forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995.
These forward-looking statements may generally, but not always, be identified by the use of words such as "will", "is expected to", “subject to” or similar expressions. These forward-looking statements include all matters that are not historical facts or matters of fact at the date of this document.
This document contains statements that are, or may be deemed to be, forward-looking statements with respect to plans and expectations regarding timing for completion of the transaction; and plans and expectations regarding the long-term growth and performance of Adbri, CRH’s partnership with Barro and the benefits of the transaction, including in relation to CRH’s growth and development opportunities in
Forward-looking statements are subject to risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future and/or are beyond CRH's control or precise estimate.
Such risks, uncertainties and other factors include, but are not limited to, economic and financial conditions, including changes in interest rates, inflation, price volatility and/or labor and materials shortages; the pace of growth in the sectors in which we operate; demand for construction and our products in geographic markets in which we operate; increased competition; adverse changes to laws and regulations; political uncertainty, including as a result of political and social conditions in the jurisdictions CRH operates in, or adverse political developments; failure to complete or successfully integrate acquisitions or make timely divestments; cyber-attacks and exposure of associates, contractors, customers, suppliers and other individuals to health and safety risks, including due to product failures. There are other important factors, risks and uncertainties that could cause actual outcomes and results to be materially different, including risks and uncertainties relating to CRH described under “Principal Risks and Uncertainties” in CRH’s Report on Form 6-K regarding the results for the six-month period ended June 30, 2023, as filed with the US Securities and Exchange Commission (the “SEC”), as well as “Principal Risks and Uncertainties (Risk Factors)” in the Company’s Annual Report on Form 20-F for the year ended December 31, 2022 as filed with the SEC.
You are cautioned not to place undue reliance on any forward-looking statements. These forward-looking statements are made as of the date of this document. CRH expressly disclaims any obligation or undertaking to publicly update or revise these forward-looking statements other than as required by applicable law.
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Contact CRH at +353 1 404 1000
Albert Manifold, Chief Executive
Jim Mintern, Chief Financial Officer
Frank Heisterkamp, Director of Capital Markets & ESG
Tom Holmes, Head of Investor Relations
Source: CRH plc
FAQ
What is the offer price for acquiring Adbri shares?
What is the total equity valuation of Adbri in the offer?
Who has recommended that Adbri shareholders vote in favor of the Scheme?
When is the proposed transaction expected to complete?
What does CRH CEO, Albert Manifold, say about the potential acquisition of Adbri?
