Sources: CRH Plc, Dublin; Beacon Roofing Supply Inc., Herndon, Va.; CP staff
CRH is set to shed a sizable slice of its legacy Oldcastle Inc. portfolio, selling its Allied Building Products-anchored Americas Distribution business to Beacon Roofing Supply, North America’s the largest publicly traded wholesale roofing and building materials distributor.
East Rutherford, N.J.-based Allied Building Products distributes roofing, siding, windows, doors, wallboard and suspended ceiling systems across 208 locations in 31 states. It will position Beacon Roofing among the top public North American wholesale building materials distributors, with annual sales upward of $7 billion, plus 593 branches in all 50 states and six Canadian provinces.
CRH acquired Allied Building Products in 1996 and pursued a growth strategy around bolt-on deals, selective greenfield developments, and private label offerings. “While the business has delivered significant improvement in performance and returns in recent years, the absence of value accretive acquisition opportunities and a lack of visibility as regards a route to market leadership, has resulted in CRH’s decision to divest this business now at an attractive valuation,” the company notes. “Proceeds from the divestment will be reallocated to value creating acquisitions and investments.”
Concurrent with the Allied-Beacon deal, CRH announced an agreement to acquire Fels, a lime and aggregate operator with nine plants in Germany, plus individual sites in the Czech Republic and Russia. CRH is a leading lime producer in Ireland, the United Kingdom and Poland, with annual production volumes of 1.2 million tonnes and sales of $212 million. The integration of Fels with existing businesses will give CRH a number two position in the European lime market.
“These transactions demonstrate the execution of CRH’s strategy of adding value through the efficient allocation and reallocation of capital, and in particular the deployment of capital into an attractive growth market in Europe—while maintaining our financial discipline,” says CRH Chief Executive Albert Manifold. “We are pleased that our Americas Distribution business is being acquired by a highly respected industry player. At the same time we see significant value creation potential from the Fels acquisition, which will also be an exciting new development platform for CRH.”