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Company Spotlight: CRH


FOR A company with a UK market capitalisation of under £60 million, Irish materials firm CRH is punching above its weight.

The firm, which has listings in Dublin and London, is constantly hoovering up smaller businesses in the UK, Europe and the US, but the latest deal in the Netherlands represents a major step up.

In addition to splashing out £33 million for a 45 per cent stake in the materials operation of Cementbouw, CRH has also snaffled the Dutch outfit's DIY, builders' merchant distribution and building products operations for £454 million.

The DIY business is more attractive because pure quoted firms in this sector, such as Kingfisher or Home Depot, trade on higher price to earnings ratios than merchants.

CRH already has exposure to the Netherlands, where the firm's own DIY stores were part of the Intergamma buying co-operative.

Cementbouw is also part of this co-operative and, once concluded, CRH should have around 33 per cent of the large store format market for retail DIY in the country.

By CRH's own admission, there are fewer synergies between the Irish firm's own operations and the cement trading and readymix businesses that also formed part of the Cementbouw deal, hence the decision to operate as a joint venture with existing management.

Pricing issues remain and the deal will not go through until November but earnings per share should rise by 4 per cent next year.