CRH to acquire Holcim-Lafarge assets for $7.3 bn

The deal will allow CRH, which is partnering with KKR & Co, to move into new markets and expand in existing ones

CRH Plc, a building-materials company, entered a binding agreement to buy cement assets that Holcim Ltd. and Lafarge SA must sell ahead of their planned merger in a transaction valued at 6.5 billion euros ($7.3 billion).

The deal will allow Dublin-based CRH, which is partnering with KKR & Co, to move into new markets and expand in existing ones.

The builder, created in 1970 through a merger of two Irish companies, operates in 35 countries with about 76,000 people and 18 billion euros in annual sales.

Cement makers Holcim and Lafarge needed to divest businesses with revenue of about 5 billion euros to ensure regulatory approval for their merger, which will combine cement- and crushed-rock operations with $40 billion in annual revenue. The companies expect the merger, agreed in April last year, to be completed in the first half.

CRH, which can cut costs from overlapping businesses, competed against bidders including a group formed by Cinven Ltd and Blackstone Group LP, people familiar with the matter have said. The transaction will be funded with cash, new debt and a 9.99 per cent equity placement, CRH said in an e-mailed statement on Sunday, and further details will be released later.

The plan to merge Jona, Switzerland-based Holcim and Paris- based Lafarge to form the world's biggest cement maker was approved last year by the European Union subject to the sale of overlapping operations in more than half a dozen countries.

Demand woes
The EU said at the time that its decision was conditional upon the divestments of Lafarge businesses in Germany, Romania and the U.K. and of Holcim units in France, Hungary, Slovakia, Spain and the Czech Republic.

The merger may allow Holcim and Lafarge to cut costs by combining operations as some of the industry's kilns run at a loss after the recent global recession eroded demand.

An acquisition spree before the financial crisis, including Lafarge's 10.2 billion-euro purchase of Orascom Cement in 2008 and Holcim's $4.1 billion deal for Aggregate Industries in 2005, widened the dominance of both companies.