BUILDING MATERIALS giant CRH has pulled out of a $540 million (€410 million) purchase after the US monopolies watchdog halted the deal yesterday.
Last March, CRH’s biggest US subsidiary, Oldcastle, agreed to buy Dallas-based rival Pavestone for $540 million. The deal was one of the biggest struck by the Irish group in 2008.
Yesterday, the Federal Trade Commission (FTC), the US equivalent of the Competition Authority, said it planned to challenge the deal on the basis that it would limit competition in 40 states.
CRH released a statement immediately afterwards, saying it and Pavestone would withdraw their notification to the competition regulator of the deal. “CRH and Pavestone regret that as a result the transaction will not now proceed,” the statement said.
Pavestone makes paving and related products that are sold largely to consumers and homeowners in chains such as Wal-Mart and Home Depot throughout the US.
Oldcastle already has businesses operating in this and related markets.
The FTC’s statement yesterday said the proposed deal would cut competition for these products, which are sold to national home centres, “such as the Home Depot, Lowe’s and Wal-Mart in nearly 300 metropolitan areas in 40 states and the district of Columbia”.
In common with the Republic, large-scale mergers have to be notified to the commission in the US, which can then carry out its own inquiry into the deal.
A spokesman explained yesterday that when the FTC believes that a merger or acquisition will reduce competition, it goes to federal court and seeks an order halting it, pending a full hearing into the matter. The issue is then tried by an independent judge at an administrative hearing, at which the FTC and the parties to the transaction can present evidence and plead their cases.
As they have agreed not to proceed, neither CRH nor Pavestone will have to go through this process.
CRH spent €1 billion on acquisitions in 2008, just 45 per cent of the €2.2 billion it spent on buying up rivals the previous year. Pavestone would have added about €400 million to this.
Earlier this month the group acknowledged that the deteriorating global economic environment had forced it to rein in its acquisition spending since the second half of last year.
Acquisition has been a key part of its growth for more than two decades, and the policy has helped make it the world’s second-biggest manufacturer and supplier of building materials.
