Building materials group CRH yesterday said it planned to raise more than #1.1 billion through a rights issue.

The group will use the money to give its expansion strategy "extra horsepower", its chief executive Mr Liam O'Mahony said at a briefing. However, he said it did not intend to pursue a single large acquisition. CRH will issue up to 103.6 million shares priced at #10.5 each, a 48 per cent discount on Monday's closing rate of #20.44. One rights share would be issued for every four existing ordinary shares, it said.

The group's stock dipped to #18.40 at one stage yesterday before closing at #19.05, #1.39 weaker than on Monday. However it closed about 60 cents above the ex-rights price, which reflects its stock's value when dealings commence on March 28th.

The issue will be Europe's second-biggest, according to its joint underwriter Davy Stockbrokers. The other underwriter is UBS Warburg.

The issue's worth is greater than the cumulative #741 million in equity raised by CRH since 1987. Yet CRH's finance director, Mr Harry Sheridan, denied suggestions that the move was a departure for the group. Its strategy had not changed, he said.

Of the issue's size, he said the discount was not unusual.

"We haven't been this big before. It's all a matter of scale," said Mr Sheridan. "It's nothing new. We have created great momentum over the years with the growth."

He added: "CRH is essentially organised to perform and to grow. We have a devolved development structure with 14 teams that have delivered acquisition momentum."

The group has made acquisitions worth #4.4 billion since 1996. As of Monday, its board had approved deals worth #453 million. These deals were at various stages of due diligence - 80 per cent of these were in Europe and the remainder were in the Americas. Earlier, Mr O'Mahony disclosed that CRH was at "the potential deal stage" with the Finnish group Adtek. While no deal had been closed yet, the group had a good regional business that would complement CRH's operations in the Netherlands and Belgium. The market estimates Adtek's worth at about #500 million.

Mr O'Mahony said the issue was planned from a position of strength. CRH's focus would remain on small and medium-sized firms, which it would bolt on to its existing operations.

He added, however, that the group would consider purchasing firms worth #300-#500 million if potential deals emerged. The funding exercise was a long-term one and use of the money would depend on the pace of acquisitions.

Mr Sheridan declined to forecast the likely level of expenditure this year.

Mr O'Mahony said: "I'd be quite disappointed if we wouldn't report a good number of deals as the year progresses."