Building materials giant CRH is set to buy a stake in a German company for an estimated €65 million following a ruling by the EU's competition watchdog.
It emerged yesterday that the European Commission's competition directorate has given the green light to the Irish company to buy up to 48 per cent of German building materials distributor Bauking.
Merrion Stockbrokers yesterday said that Bauking's sales were in the region of €500 million a year.
Taking that and its margins of around 3 per cent a year into account, the firm's analyst, John Mattimoe, speculated that the price would be in the region of €60-€65 million.
Industry sources said last night that the deal was in that ballpark. CRH should complete the deal over the next six to eight weeks.
The Irish group is likely to formally announce the deal, along with other acquisitions, early next year, depending on the timing of its completion.
Mr Mattimoe described Bauking as a "reasonably sized bolt-on" for CRH, and pointed out that it is completing the purchase of businesses at a faster rate than earlier this year.
Under the terms of the agreement, CRH will get an initial 30 per cent of Bauking in return for a capital injection, and then has the option to buy a further 18 per cent of the company.
Bauking's business is focused in the northwest of Germany and its headquarters are in the city of Hannover. Around 70 of its branches are builders merchants - which sell direct to the trade - and the remainder are DIY stores.
CRH has a number of broadly similar operations in Holland, and Mr Mattimoe believes that it may be able to boost Bauking's margins by combining their purchasing, IT and other operations with those of the German business.
The news came as Davy Stockbrokers' analyst, Joe Burnell, released a research note predicting that CRH's European businesses should deliver above average growth of 2.6 per cent this year and 1.8 per cent and 1.3 per cent in 2006 and 2007 respectively.
