CRH plc, the international building materials group, announced today that it has reached agreement to acquire Lafarge-owned Mykolaiv Cement for an upfront cash consideration, including debt assumed, of euro 96 million. Completion of the transaction is subject to the granting of the required regulatory approvals.
With the addition of Mykolaiv Cement, located in the Lviv region of Western Ukraine, CRH becomes the market leader in Ukraine, allowing it to further leverage the benefits of the new Podilsky factory.
CRH in Ukraine: CRH entered the Ukraine market in 1999 with the acquisition of Podilsky Cement and in 2011 commissioned a state of the art dry process kiln at that facility with an annual clinker capacity of 2.3 million tonnes. Also in 2011, CRH acquired a majority stake in Odessa Cement.
CRH is the now the largest cement producer in Ukraine, a growing economy with a population of almost 45m people. Cement demand in Ukraine is likely to grow over time which should result in positive pricing dynamics. All this points to decent potential returns. With CRH raising finance in the bond market at just over 3%, longer-term economic value creation within the group is not reflected in its valuation. The group continues to trade at a discount to book value.
