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CRH complete first phase of European lime divestment

CRH have completed the first phase of their European lime divestment to SigmaRoc CRH have completed the first phase of their European lime divestment to SigmaRoc

SigmaRoc acquire Deal 1 targets in Germany, Czech Republic, and Ireland for €745 million

ON 22 November 2023, CRH plc announced that they had reached agreement with SigmaRoc plc to divest their lime operations in Europe for a total consideration of c.$1.1 billion.

The first phase of this transaction (Deal 1 targets), comprising CRH’s lime operations in Germany, Czech Republic, and Ireland, has now been completed for a total consideration of €745 million (approximately £645 million).

The acquisitions will provide an opportunity for SigmaRoc to become Northern Europe’s leader in lime and a key supplier to the structural growth markets critical for the green transition, in alignment with the company’s ESG and net-zero ambitions.

Lime and limestone are key resources in the transition to a more sustainable economy. New applications for lime and limestone products as part of a drive for sustainability include the production and recycling of lithium batteries, the decarbonization of construction including through substitution of cementitious material and new building materials, and environmental applications including lake liming, air pollution, and direct air capture.

The lime market is expected to continue to grow and to be worth €1.9 billion in 2031 across the enlarged SigmaRoc Group’s markets.

The Deal 1 targets, which together have a consistent performance track record, delivering financial year 2022 revenue of €579.7 million and EBITDA of €133.7 million and EBITDA margin in excess of 20%, are expected to deliver revenue growth opportunities and cost synergies resulting in at least €30 million of EBITDA contribution by 31 December 2027.

Whereas the Deal 1 targets are stand-alone entities, the remaining UK and Polish call option targets require carving out of existing CRH businesses in order to be acquired. Completion of this phase of the transaction is expected to take place later this year.

Pro forma revenue of the enlarged SigmaRoc Group for financial year 2022 would be £1 billion with underlying EBITDA of £211 million (assuming, in each case, exercise of the UK and Polish call options).

The enlarged Group is expected to be significantly cash generative with a free cash flow target in excess of £100 million per annum, which is expected to allow SigmaRoc to de-gear at a rate of 0.5x per year with target leverage of 1.0x.

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