Building materials giant, CRH, confirmed yesterday that it would look at buying rival Tarmac, which is said to be worth €6 billion.
Tarmac's owner, exploration multi-national Anglo American, put the business on the market earlier this month. Both CRH chief executive Liam O'Mahony and finance director Myles Lee said that the company would look at it.
If CRH were to do the deal, it would be the largest acquisition in the Irish group's history - well ahead of last year's €1 billion acquisition of US business, Apac.
Mr Lee said at a press conference on the group's interim results that CRH's balance sheet gave it the leeway it needed for substantial acquisitions. "It means that we can look at doing the big deals if we want," he said.
Mr O'Mahony said the company was not afraid of taking on bigger acquisitions than Apac. "Our concern would be the level of value they offer us," he said.
CRH is likely to receive a sale memorandum from Tarmac's advisers, UBS, in the coming weeks.
The news came as CRH reported that a recovery in Europe helped lift profits by 27 per cent to €670 million in the first half of the year. The group reported a 21 per cent increase in sales to €9.7 billion in the six months to June 30th from €8 billion in the same period last year.
Mr O'Mahony said that a strong performance in the group's main European markets had counteracted weakness in the United States. CRH's business is split 50/50 between both sides of the Atlantic.
He stressed that, despite the fact that its share price has suffered in the recent stock market turmoil, the group continued to grow.
"The bottom line is that we're still making money; everybody seems to have forgotten that because of everything else that's been going on," he said.
But the company's stock again suffered in falling markets yesterday despite an early morning rally. CRH gained 17 cent early in the day, but closed 63 cent down at €30.85 in Dublin last night.
Group operating profit for the period was €771 million, an increase of 26 per cent on the first six months of 2006. It earned €22 million from the sale of surplus land.
Finance costs were €229 million, finance revenue was €79 million and associate businesses contributed €27 million to the bottom line.
This left it with a pre-tax profit for the first six months of the year of €670 million, up 27 per cent on the same period in 2005.
Operating profit from the European side of its business grew by €165 million to €495 million. The group said that €120 million was a result of organic growth while acquisitions, both this year and last year, contributed €45 million.
Operating earnings from its American business dipped €7 million to €276 million. There was an underlying fall of €29 million in profits, while the dollar weakness against the euro resulted in a further €21 million foreign exchange hit.
However, contributions from acquisitions made since the interim stage last year added €43 million to the bottom line.
Earnings per share grew 26 per cent to 92.8 cent from 73.7 cent. The board is proposing to pay an interim dividend of 20 cent, as against 13.5 cent last year.
The group spent €1 billion on buying businesses during the first half. These included major deals like Swiss company, Gétaz Romang, US glass group, Vistawall, and cement producers in Turkey and China.
Mr O'Mahony said that its pipeline of potential acquisitions was strong. He would not be drawn on whether the group would match last year's spend of over €2 billion.
