Blackstone Moves to Expand Into Building Materials -- WSJ
July 16 2019 - 3:02AM
Dow Jones News
By Ben Dummett and Miriam Gottfried
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (July 16, 2019).
Global buyout firm Blackstone Group Inc. is in advanced talks to
buy the European distribution arm of CRH PLC, one of the world's
largest building-materials suppliers, according to people familiar
with the matter.
The sale price couldn't be learned.
The deal would cap CRH's monthslong review of the business as
the company tries to simplify its global operations and bolster
profits. It also follows CRH's move last year to sell its U.S.
distribution business to Beacon Roofing Supply Inc. for $2.63
billion.
Based in Dublin, Ireland, CRH is the largest asphalt producer in
North America as part of its global operations that span 32
countries. In 2018, the company reported a 7% gain in operating
profits to EUR3.4 billion ($3.83 billion) as its businesses
supplying construction materials such as cement, construction
accessories and architectural products generated higher
revenue.
Still, declines in revenue and operating profit in the European
distribution business, a supplier of materials to professional
builders as well as specialist heating and plumbing contractors,
were a drag on CRH's overall results.
The deal would provide Blackstone with a potential platform in
the building-materials sector. Private-equity firms often approach
a deal as part of a bigger bet to build a large-scale company in
part through further acquisitions, expecting the strategy will
generate higher returns from an ultimate sale of the business.
In 2009, Blackstone together with Greenwich, Conn.-based
Silverhawk Capital Partners created Summit Materials Inc. and
subsequently used it to acquire more than 35 companies in the
sector to establish a major U.S.-based supplier of aggregates,
concrete and asphalt. Blackstone took Summit public in 2015 in a
deal that valued the company at $1.67 billion.
Blackstone competed against Lone Star Funds and Bain Capital
among others for the CRH business. That competition underscores
private-equity investors' healthy appetite for unloved businesses
carved out of larger companies. These deals allow private-equity
firms to deploy their record amounts of cash quickly, while trying
to find turnaround opportunities to generate returns.
In May, Swedish buyout firm EQT struck a $10.1 billion deal to
acquire Nestlé SA's skin-health business.
And last year, a Carlyle Group LP-led consortium acquired the
specialty-chemicals business of Dutch paints giant Akzo Nobel NV
for EUR10.1 billion including debt.
--William Louch contributed to this article.
(END) Dow Jones Newswires
July 16, 2019 02:47 ET (06:47 GMT)
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