- CRH sees annual savings from integration of $40 million
- Completion of acquisition scheduled for early September
CRH Plc agreed to buy Los Angeles-based C.R. Laurence Co. for $1.3 billion to expand in products used in window installation as U.S. construction markets stabilize.
C.R. Laurence, which is owned by the Friese family, makes hardware and products used in the installation of architectural glass and generated pretax profit of $51 million in 2014, Dublin-based CRH said in a statement Thursday.
CRH shares rose 4.9 percent to 25.79 euros as of 8:56 a.m. in Dublin, giving the company a market value of 21.2 billion euros ($24 billion).
The purchase is timed with a recovery in U.S. construction markets, driven by demand for industrial buildings. CRH reported a "promising backlog" of business at its Americas Materials division in May. Combining the companies will generate $40 million a year in savings from 2017, it said.
The $40 million figure is “conservative. There are easy win synergies here,” Chief Executive Officer Albert Manifold said in a phone interview. “We’ve been talking to them for 10 years. We saw as it as too good to let pass this year.”
Laurence is forecast to generate 2015 sales of $570 million and earnings before interest, taxes, depreciation and amortization of about $115 million. Its management will stay on to help with the merger of the operations.
“The integration and, in our view, upside to synergy targets underpins a positive news flow cycle over the coming 12-24 months for CRH,” said Robert Eason, an analyst with Goodbody Stockbrokers in Dublin who has a buy rating on the shares.
Laurence held a formal global auction that attracted major strategic players as well as sponsors, according to Lloyd Grief, president of Greif & Co., which advised the privately held company.
The glazing company, which has grown to a group with about 1,700 employees from just 7 in 1961, will help rebalance CRH’s portfolio both geographically and product-wise after its acquisition of assets from LafargeHolcim that added heft in Europe in building materials, as opposed to the building products that Laurence manufactures and distributes under its own brand throughout North America.
CRH said today first-half earnings before interest, tax, depreciation and amortization from continuing operations rose 29% to 555 million euros, and that it’s on track to “deliver another year of growth” in 2015.