Incorporated: 1926 as Roadstone Ltd.; 1970 as Cement Roadstone Holdings
Sales: EUR 11.08 billion ($13.29 billion) (2003)
Stock Exchanges: Irish London
Ticker Symbol: CRHPLC
NAIC: 327310 Cement Manufacturing; 212321 Construction Sand and Gravel Mining; 324121 Asphalt Paving Mixture and Block Manufacturing; 327390 Other Concrete Product Manufacturing
CRH plc has emerged as a leader in the fast-consolidating global building materials market. The Dublin, Ireland-based company has long pursued an active acquisition program, spending as much as EUR 1 billion in a single year and typically targeting small and mid-sized businesses in order to build up an international network of companies. Most of CRH's acquisitions continue to operate under their former names and management, while taking advantage of their parent company's strong market position and international infrastructure. CRH operates in nearly 2,000 sites in 23 countries, with a particularly strong presence in the United States—operating under the primary Oldcastle Materials umbrella—and in Europe. CRH handles a broad spectrum of building materials, including primary materials—including cement, ready-mixed concrete, aggregates and asphalt—and value-added materials such as precast concrete products, bricks, insulation, glass, and related products. CRH is also present in the distribution segment, operating its own networks of builders merchants and consumer-oriented do-it-yourself stores in various markets, including the Benelux countries, Switzerland, and Spain, as well as in the United States. The strategy behind CRH's acquisition program has long focused on achieving a balanced geographic and product-mix portfolio. The company's four primary divisions—Europe Materials, Europe Products & Distribution, Americas Materials, and Americas Products & Distribution—each represent roughly 25 percent of total group sales and operating profits, although the company's Americas businesses, especially its North American operations, remain the group's sales and profits leader. CRH posted sales of more than EUR 11 billion ($13 billion) in 2004. The group is led by chairman Pat Malloy and CEO Liam O'Mahoney and is listed on the Irish and London stock exchanges.
Merging Irish Roadstone Leaders in the 1970s
CRH started out in the 1930s as an aggregates business founded by brothers Tom and Donald Roach. Their company became Roadstone Ltd. in 1949, and for the next two decades remained one of only two authorized cement producers in Ireland. The other licensed producer was the far larger Irish Cement, which was in fact owned by Danish interests. In 1970, however, a merger—described as "acrimonious" was pushed through, combining Roadstone and Irish Cement into a new company, Cement Roadstone Holdings, later known as CRH. The new company included operations in cement, aggregates, asphalt, and concrete products. Nearly all of the group's sales, which stood at the equivalent of EUR 26 million in 1970, were generated in Ireland.
CRH, led by Tom Roach, went public in 1973. The public offering was made in part to fuel the group's expansion objectives. Although the group enjoyed a near-monopoly hold on much of Ireland's primary building materials sector, the country's small population left little room for growth, while the focus on a single market left the company vulnerable to economic downturns. CRH therefore looked to the international market for its future expansion.
The company's first international move came that same year with the purchase of Van Neerbos, in the Netherlands. The acquisition added concrete products operations, as well as a distribution operation. Other acquisitions followed throughout the 1970s, including a move into the United Kingdom, and intoScotland in particular, with the purchase of the builders merchants group Henderson in 1978.
The year 1978 also marked CRH's entry into the United States, where it acquired Utah-based concrete products group Amcor. That acquisition formed the basis of the company's U.S. division, which took on the name of Oldcastle Building Products. Nonetheless, the company had already adopted its expansion policy of maintaining its acquisitions' names and management in order to take advantage of each company's local affiliations.
CRH's expansion in the 1970s had transformed the company from a small-sized operation into a fast-growing building products and distribution group with sales topping the equivalent of EUR 325 million at the start of the next decade. By the end of the 1980s, however, CRH was to transform itself yet again, with operations in seven countries and sales passing the equivalent of EUR 1.3 billion. Importantly, the company had also diversified its product mix, which included cement, asphalt and other basic construction and road-building materials, and an increasing range of finished products such as concrete products, bricks, glass, and the like.
Geographic distribution had been ensured in part by the continued build-up of the group's U.S. holdings, which included the 1985 purchase of Callanan Industries, which produced aggregates and asphalt, in New York State. The Callanan acquisition proved a cornerstone of CRH's later dominance of the New York and Northeastern building materials markets. In another international expansion, the company moved into Spain in 1988, acquiring Beton Catalan Group. The company continued to develop its European interests, adding new subsidiaries in the Netherlands and the United Kingdom, as well as in Germany. Meanwhile, CRH had also built up a number of strong regional distribution networks, such as in the United Kingdom, where it renamed its building merchants network as Keyline in 1988.
Rapid Expansion in the 1990s
CRH's expansion also included an ever-increasing range of products, such as its entry into the U.S. glassmaking market with the purchase of 13 plants for a total cost of $135 million in 1990. The company also stepped up its U.S. masonry presence with the purchase of three companies that year, including Betco Block & Products Inc, based in Bethesda, Maryland. By then, the company's record already included some 60 acquisitions.
CRH's geographic and operational diversity helped shield it from the worst effects of the economic recession of the early 1990s. By 1993, the company was able to return to its expansion effort, starting with the purchase that year of Pennsylvania-based Pennsy Supply. The United States retained the group's growth focus, with further acquisitions in 1994 including Balf Co. in Connecticut, Lebanon Rock in Pennsylvania, and additional quarry and asphalt operations in New York.
The arrival of Don Godson as company CEO in 1995 signaled the start of accelerated expansion for the company. CRH's acquisition strategy became still more ambitious, backed up by 12 (and later 14) acquisition teams which scouted the group's markets for potential takeover targets. CRH nonetheless maintained its preference for acquiring small-and mid-sized, privately owned, and usually family-run and profitable businesses, rather than costly headline-making mega-acquisitions. CRH took a patient approach to purchases, often spending years wooing owners of businesses it wished to acquire.
In 1995, CRH made its first entry into Poland, buying Holding Cement Polski, which later gained majority control of Cementownia Ozarow, one of the country's major cement producers. That acquisition also marked the first CRH cement manufacturing operation outside of Ireland. By the end of the decade, CRH numbered more than a dozen operations in Poland.
Meanwhile, the company stepped up its spending, paying, for example, $87 million to acquire the Jack B. Parson Companies, which operated quarries in Idaho, Utah, and Nevada, in 1996. The company also purchased Ritangela and Brooks Products, based in New York, and Foster & Southeastern, based in Massachusetts, that year.
The company's purchases were now growing larger. In July 1996, CRH paid more than $120 million to acquire Allied Building Products, which specialized in roofing and cladding products. Then, in September 1996, the company made its largest acquisition to date, paying nearly $329 million to acquire Tilcon, a major road construction specialist in the Northeast. The Tilcon acquisition established CRH as that region's leading building materials supplier.
CRH has twin imperatives—to perform and to grow. Throughout the Group, businesses are required to deliver performance by achieving a targeted return on capital employed thereby earning the right to grow: key performance metrics are understood and consistently applied across the Group; financial control is exercised through a rigorous annual budgeting process and timely monthly reporting; monthly results are vetted by Divisional management and critically reviewed at Group headquarters; full year performance is regularly reforecast under prudent accounting policies; best practice initiatives in production, distribution and administration are benchmarked against quantified targets. Growth is achieved: through investing in new capacity, developing new products and markets, by acquiring and growing mid-sized companies, augmented from time to time with larger deals.
International Building Materials Leader in the 2000s
CRH continued adding to its U.S. road-building business, extending into the Midwest and the mideastern region and adding such companies as CPM, Trenwyth Industries, Akron Brick and Block, and New York Trap Rock. The company also moved into France, buying up a building materials distribution network, and deepened its presence in the Netherlands, with purchases including a brick manufacturer, additional do-it-yourself stores, and a maker of skylights and ventilation systems. In 1998, the company boosted its French business with the purchases of Rabnoi SA, a builders merchant company, and majority control of drainage systems and concrete vault manufacturing group Prefaest SA.
By then, the company's sales were nearing the equivalent of EUR 4 billion. In 1999, CRH decided to focus on its materials and products operations in the United Kingdom, selling its Keyline distribution business to Travis Perkins. CRH then found a new market when it bought up Finland's only cement producer, Finnsementti Oy, together with Lohja Rudus Oy, that country's top producer of aggregates and ready-mix concrete. At the same time, CRH boosted its U.S. presence with the $422 million purchase of Michigan's Thompson-McCully Cos.
CRH's spending on acquisitions in 1999 topped EUR 1.5 billion ($1.3 billion), double the year before, as the company continued to build scale. Don Goodson retired the following year, replaced by Liam O'Mahoney as the company's chief executive. O'Mahoney maintained his predecessor's acquisition policies, describing the group's scouting and purchasing process to The Financial Times with the statement, "We try to make ourselves user friendly to crusty owner-entrepreneurs. We support the hidden talent in a family business where the rake of a son was going to take over."
As it entered the 2000s, CRH's revenues neared EUR 7 billion. By the end of 2001, the group's continued purchases had boosted it past EUR 10 billion. In that year, the company completed a EUR 1.1 billion rights issue, providing it with the ammunition for further growth. The company entered Switzerland that year with the EUR 425 million purchase of that country's Jura Group, adding cement, concrete and aggregates operations, as well as a regional distribution network. The company also entered Israel, acquiring a major stake in Nesher Israel Cement Works, the only cement producer in that country. In the United Staes, CRH paid $362 million in order to acquire Ohio's Shelly Group.
In 2002, the company stepped up its presence in Germany, paying EUR 214 million to acquire EHL Group, a maker of paving materials and products. The company in the meantime completed a spree of 25 acquisitions in the United States, including Mount Hope Rock Products, based in New Jersey, for $144 million. At this time, CRH, through Oldcastle, had become the leading U.S. asphalt producer and a top producer of aggregates and ready-mix concrete as well. The company also claimed regional leadership in a number of product categories, including glass, brick, and precast concrete products.
CRH's largest acquisition to date came in July 2003 when it agreed to pay EUR 693 million in order to acquire the Netherlands' Cementbouw. The acquisition, which included Cementbouw's own building materials production, as well as its market-leading do-it-yourself stores, gave CRH a dominant position in the Netherlands building materials market. The Cementbouw purchase, however, was only part of a company record of more than EUR 1.6 billion in purchases that year.
With revenues topping EUR 11 billion, CRH had carefully constructed an international empire of building materials, building products, and distribution outlets. CRH showed little sign of slowing down as it approached the mid-decade mark; by May 2004, the company had spent more than EUR 600 billion on new acquisitions, including the EUR 200 million purchase of a 49 percent stake in cement producer Secil, signaling the company's entry into the Portuguese market. CRH appeared to have cemented its place among the world's top building materials groups.
- Tom and Donald Roach found a cement production business, one of only two licensed cement producers in Ireland.
- Irish Cement, the other licensed cement producer, is formed.
- The Roach company takes on the name of Roadstone Ltd.
- Roadstone and Irish Cement merge to form Cement Roadstone Holdings (CRH).
- CRH enters the Netherlands with the acquisition of Van Neerbos.
- The company enters the U.S. market with purchase of Amcor and forms a U.S. holding company, Oldcastle Building Products.
- Callanan Industries of New York is acquired.
- The company enters Spain with the purchase of Beton Catalan Group.
- Pennsy Supply of Pennsylvania is acquired.
- The company enters Poland with the purchase of 75 percent of Cementownia Ozarow.
- CRH purchases Tilcon for EUR 329 million.
- The company sells Keyline, UK builders merchants, to Travis Perkins and enters Finland through the purchase of Finnsementti; Thompson-McCully Cos, based in Michigan, is acquired.
- Shelly Co. of Ohio is acquired for $362 million.
- CRH acquires the Netherlands' Cementbouw, its largest acquisition to date, for EUR 639 million.
- The company enters Portugal with the EUR 200 million purchase of cement producer Secil.
Allied Building Products Corporation (United States); B-Complex S.A. (Poland); Beton Catalan Group (Spain); Béton Moulé Industriel sa (France); Betonelement A/S (Denmark); Callanan Industries, Inc. (United States); Cementbouw Detailhandel bv (Netherlands); Cementownia Rejowiec S.A. (Poland); CRH America, Inc.; CRH Fencing Ltd.(United Kingdom); CRH Klinkier Sp. z o.o. (Poland); CRH Sudamericana S.A. (Argentina); Douterloigne nv (Belgium); EHL AG (Germany); Farrans Ltd. (United Kingdom); Finnsementti Oy (Finland); Grupa Ozarów S.A. (Poland); Heda sa (France); Ibstock Brick Ltd. (United Kingdom); Irish Cement Ltd.; JURA-Holding (Switzerland); Oldcastle Building Products Canada, Inc.; Oldcastle Materials Southeast; Oldcastle Materials, Inc. (United States); Oldcastle, Inc. (United States); Pennsy Supply, Inc. (United States); Premac Spol. s r.o. (Slovakia); Premier Cement Ltd. (United Kingdom); Premier Periclase Ltd.; R.J. Maxwell & Son, Scott (United Kingdom); Roadstone-Wood Group; The Shelly Company (United States); Tilcon Capaldi, Inc. (United States); Van Neerbos Bouwmarkten bv (Netherlands); Van Neerbos Bouwmarkten nv (Netherlands); Vidrios Dell Orto, S.A. (79.95, Chile); EcoTherm GmbH (Germany).
IFI; Lafarge S.A.; Cementos Apasco S.A. de C.V.; Glacier Northwest Inc.; HeidelbergCement AG; Fomento de Construcciones y Contratas S.A.; HBG, Hollandsche Beton Groep N.V.; Cemex S.A. de C.V.; Grupo Ferrovial S.A.
Batchelor, Charles, "CRH Acquisitions Hit Euros 1.5bn," Financial Times, January 16, 2001, p. 26.
Blackwell, David, Peter Smith, and Lucy Smy, "CRH Expands European Empire with Euros 693m Deal," Financial Times, July 30, 2003, p. 21.
Cole, Robert, "Global Acquisitions Help to Cement CRH's Houdinilike Escape," Times (London), January 8, 2004, p. 28.
Craig, Carole, Frederick Studemann, "Home Truths for Ireland," International Management, May 1993, p. 32.
Guthrie, Jonathan, "Poetry Lover with His Own Quarry," Financial Times, August 29, 1998, p. 20.
Lavery, Brian, "Building Materials Company Ireland Loves to Hate," New York Times, September 5, 2002, p. W1.
Mortished, Carl, "Continent a Growth Blackspot for CRH," Times (London), March 3, 1999, p. 23.
O'Halloran, Barry, "CRH Makes 'Positive' Start to Year," Irish Times, May 6, 2004, p. 19.
Phillips, Richard, "Big in the Material World," Independent on Sunday, September 8, 1996, p. 6.
Waples, John, "Irish Combine Strides ahead with Small Steps," Sunday Times, March 30, 1997, p. 10.
—M. L. Cohen