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NEW YORK - CRH (NYSE:CRH), a construction materials giant with $35.8 billion in annual revenue and an "GREAT" financial health score according to InvestingPro, has signed an agreement to acquire Eco Material Technologies, a North American supplier of Supplementary Cementitious Materials (SCMs), for $2.1 billion, according to a press release statement.
The acquisition, subject to regulatory approval, is expected to close in 2025 and will be funded with cash on hand. With a strong current ratio of 1.63 and manageable debt-to-equity ratio of 0.82, CRH does not anticipate any change in its credit ratings as a result of the transaction.
Eco Material operates a national network of over 125 utility source locations, production facilities and terminals. The company processes and recycles approximately seven million tons of fly ash and three million tons of synthetic gypsum annually.
"This strategic acquisition further positions CRH as a leading cementitious player in North America with both cement and SCM capabilities," said Jim Mintern, CRH CEO, in the statement.
The Utah-headquartered Eco Material will continue to operate under its current name as "Eco Material Technologies, a CRH Company" following the acquisition. More than 1,100 Eco Material employees will join CRH’s workforce.
Eco Material partners with electric utilities to process and recycle materials that can be used as alternatives to Portland cement in concrete production, which can reduce CO2 emissions in construction.
CRH, listed on both NYSE and LSE, employs 80,000 people across 28 countries and maintains market leadership positions in North America and Europe. The company provides building materials for transportation, infrastructure projects, and non-residential construction.
The acquisition aligns with CRH’s strategy of securing long-term supply of materials and expanding its distribution network to serve customers in the North American infrastructure sector.
In other recent news, CRH plc reported a first-quarter net loss of $98 million, or $0.15 per share, which was wider than analysts’ expectations of a $0.08 loss per share. Despite the loss, the company reaffirmed its full-year guidance, noting that revenue growth was offset by seasonal factors. Additionally, CRH CEO Jim Mintern highlighted that the recovery of the U.S. residential construction market might be delayed due to persistent high interest rates and inflation, with improvements now expected by 2026.
Analysts have been adjusting their views on CRH, with DA Davidson downgrading the stock from Buy to Neutral, citing a slower near-term growth outlook. Conversely, Morgan Stanley raised its price target for CRH to $110, maintaining an Overweight rating, influenced by an anticipated increase in EBITDA due to merger and acquisition activities. Bernstein SocGen Group initiated coverage with an Outperform rating and a $115 price target, emphasizing CRH’s dominant position in the North American aggregates and asphalt market.
The company’s involvement in U.S. infrastructure projects is seen as a protective factor in the current volatile economic climate, with benefits expected from government spending initiatives like the Infrastructure Investment and Jobs Act. These developments highlight the mixed perspectives among analysts and the company’s strategic positioning in a challenging market environment.
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