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Ireland’s CRH withdraws from bidding for PPC

Cement maker still in talks with LafargeHolcim.
Fairfax still has until December 12 to post its partial offer circular to PPC. Picture: Moneyweb

Ireland’s CRH, the world’s third-largest building materials supplier by market value, has decided not to bid for rival PPC, the South African company said on Thursday, leaving the field clear for rival suitors.

Last month, CRH made an undisclosed cash bid for PPC and had been given time for due diligence and to submit an updated bid.

“CRH has decided not to submit an updated expression of interest and therefore considers it appropriate to withdraw from the Independent Board’s process,” PPC said in a statement.

PPC last month turned its back on a takeover attempt by AfriSam, backed by Canada’s Fairfax Africa. However, regulations allow Fairfax until December 12 to post its partial offer circular.

CRH said in August it had around 5 billion euros ($5.90 billion) in cash to spend on M&A over the next 18-24 months. It has committed 3 billion euros of that to buying Ash Grove Cement Co and a further $750 million on other cement acquisitions in Florida.

However, a purchase of PPC would have run counter to CRH’s recently declared acquisition strategy, with chief executive Albret Manifold saying last month that the firm would concentrate on deals in North America and would not overinvest in developing economies.

“CRH’s strategic priority remains its end-markets in Europe and North America … we always viewed PPC as a low probability deal which fitted into the ‘we look at all opportunities’ category,” said Davey analyst Robert Gardiner, who rates CRH shares as “outperform”.

A spokesman for Dublin-based CRH said the company had no comment to make.

PPC, which has been a target for industry consolidation for several years, said it was still talking to Switzerland’s LafargeHolcim.

LafargeHolcim has said that it is in talks with the board of PPC regarding a possible transaction in Africa, while Dangote Cement, majority owned by Africa’s richest man, Aliko Dangote, has also shown an interest.

Dangote Cement made an approach in September, but later withdrew, saying it did not want to get into a lengthy process with an uncertain outcome.

Shares in PPC, which has a market capitalisation of R11.02 billion ($812 million) and had net debt of R4.4 billion at the end of September, were down 4.4% at R6.59 at 1035 GMT, when CRH’s share price was up 1.2% at 29.7 euros.


PPC share performance


PPC last month reported a 36% rise in half-year earnings, helped by robust performance in Zimbabwe and Rwanda.

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