A US subsidiary of building materials giant, CRH, has paid $50 million (€39.25 million) for a 50 per cent share in a new Florida-based cement company in a bid to cash in on the state's building boom.
CRH announced yesterday that a US subsidiary, Oldcastle Materials, has taken a 50 per cent stake in the American Cement Company (ACC). The deal will result in the Irish company entering the cement production in the US for the first time.
The statement said that Oldcastle paid $50 million cash for the stake. It will also loan ACC the cash needed to build a cement production plant in central Florida.
Trap Rock Industries, based in New Jersey, holds the remaining 50 per cent share in ACC, CRH said. Trap Rock is a major regional building materials and contracting company in the US.
It formed ACC to cash in on Florida's current building boom by developing and operating the cement plant. Florida has one of the strongest building sectors in the US.
CRH said that population and economic growth trends for the state are very positive. The state current imports around 40 per cent of the 10 to 11 million tonnes of cement it uses every year from other regions and ACC intends to exploit this shortfall in capacity.
The new plant will be located at Sumterville, close to Orlando and Tampa and will produce 1.1 million tonnes of cement a year. It is expected to begin production in two years time.
CRH already has a strong presence in Florida through its products and distribution division. However, this is the first time that Oldcastle has moved into Florida and the cement production market.
Commenting on the move, Oldcastle chief executive, Tom Hill, said the outlook for the Florida building sector was excellent. "We believe there is a real need for the local production capacity that ACC's new facility will add," he said.
A CRH spokesman said that the deal was an important from a strategic point of view. CRH revealed last month that it spent more than €800 million on acquisitions during the first half of the year, three times its outlay during the same period in 2005.
However, the number of acquisitions it made in the earlier part of 2005 was markedly below that of the previous year's.
Its key purchases in the first half of this year included European metal construction materials business, Halfen Deha, for €170 million in May.
A month earlier it further consolidated its position as the biggest player in its industry in the US by paying €280 million for Texas-based building materials distributor, MMI.
CRH is a very active buyer of rival businesses and drives a high proportion of its growth through acquisition.
The group is the biggest on the Irish Stock Exchange by market capitalisation.
