Sources: U.S. Federal Trade Commission; CP staff
CRH Americas will consummate a $3.5 billion acquisition of Ash Grove Cement Co. by month’s end following a June 14 settlement resolving Federal Trade Commission charges that the deal violates antitrust law. Terms call for the Oldcastle Inc. parent company to sell a Three Forks, Mont., cement plant and quarry to GCC Americas; three Omaha, Neb., area sand & gravel sites to Martin Marietta Materials; plus, three quarries and two asphalt plants near Kansas City to Summit Materials. The settlement also contains two three-year provisions: It grants GCC an option to use two Three Forks-fed CRH terminals in Alberta; and, holds that CRH, at GCC’s option, will purchase cement from the mill for distribution in Canada.
FTC proposed the settlement concurrent with a complaint, filed in U.S. District Court, alleging a harmful effect on competition for portland cement and aggregates in four states. The proposed acquisition would reduce the number of significant competitors in metro areas, regulators contend, increasing the likelihood that the merged company would unilaterally exercise market power—leading to agencies and consumers paying higher prices for materials. CRH Americas and Ash Grove Cement own Montana’s two sole portland cement plants, for example, and their subsidiaries are leading sand & gravel and crushed stone producers, respectively, in the Omaha/Council Bluffs, Iowa, and Johnson County, Kan., markets.
As suitors of the FTC-pinpointed cement, aggregate and asphalt operations, GCC, Martin Marietta and Summit Materials possess what the agency calls “the experience and capability to replace one of the merging parties as a significant competitor in the relevant markets.”
CRH Americas and Overland Park, Kan.-based Ash Grove announced an agreement for the tie up in September 2017, subject to approval of the latter company’s shareholders. Outlining the rationale for the offer and agreement, officials noted that CRH Americas—through the Oldcastle Architectural, Materials and Precast businesses—are Ash Grove’s largest customer. The deal elevates CRH Americas to a major North American cement producer, with upwards of 10 million tons’ capacity between 10 plants in the U.S. and Canada. The producer established a significant foothold in portland cement production three years ago, acquiring the Holcim (Canada) business amid the Lafarge Group and Holcim Ltd. merger.