Concrete Products covers the issues that attract producers of ready mixed and manufactured concrete focusing on equipment and material technology, market development and management topics.
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The ink had dried on September's column, "Oldcastle-style capital reallocation," by the time CRH Plc announced the boldest move in almost four decades centered on Oldcastle Inc., its North American business: A $3.5 billion acquisition of Kansas-based Ash Grove Cement Co., scheduled to close by year end. "Oldcastle-style" assessed the planned sale of the CRH Americas Distribution segment—roofing, siding and insulation distributor Allied Building Materials—in a $2.6 billion deal with Beacon Roofing Supply. CRH Chief Exec- utive Albert Manifold framed the move within a strategy of appropriately directing capital, concluding, "Proceeds will be reallocated to value creating acquisitions and investments." And how. Ash Grove appears a near-perfect target given CRH's propensity to pony up for well-run, deeply rooted operators. It brings Oldcastle Materials inte- grated or stand-alone sites from the Great Plains to the Pacific Northwest: Eight cement and 52 ready mixed concrete plants, along with 20 limestone quarries and 25 sand & gravel operations. Oldcastle Architectural, whose dry mix and mortar brands include Sakrete and Amerimix, stands to gain nine bagging plants. "CRH, as our largest customer, has enjoyed a close and highly productive rela- tionship with Ash Grove for decades," Ash Grove Chairman Charlie Sunderland said of the agreement to sell the business. "The Board of Directors believes CRH will be able to bring Ash Grove on the next phase of its development after 135 years in operation and over a century under the stewardship of the Sunderland family." The Ash Grove portfolio makes CRH a key player in U.S. portland cement production, and adds perhaps 10-25 percent to Oldcastle Materials/Architectural's annual aggregates, ready mixed concrete and packaged mix or mortar volumes. It reinforces what was already the most important concrete producer in North America, on the strength of these company-reported—or Concrete Products-es- timated—U.S. market positions for the Oldcastle Architectural, Materials and Products businesses: • Number one in concrete block and paver; • Number one in asphalt; • Number three or four in ready mixed concrete; • Number one or two, by overall tonnage, in utility, architectural and structural precast concrete; • Number three in combined sand & gravel and crushed stone tonnage; and, • Number five in U.S. portland cement production. The Ash Grove properties reported a 2016 pre-tax profit of $215 million on sales of $2.5 billion. They will offset the loss of Americas Distribution rev- enues and best roofing, siding and insulation margins. Based on integration and cost-savings potential, CRH capital reallocated to the Ash Grove deal will almost certainly see the Oldcastle Materials, Architectural and Products divisions maintain or extend what is already a proud rate of return on investment to shareholders: Aggregates, cement, concrete and asphalt sales in the U.S. and Canada represent upwards of 50 percent of CRH sales, and between 60-70 percent of the company's operating profit. "Ash Grove is an excellent addition to CRH's portfolio of businesses across North America as we seek to deploy our capital into high-quality businesses that enhance our global asset base and provide opportunities to create shareholder value," Manifold affirms. If closed this year, the Ash Grove deal will bring CRH outlays over a 30-month window toward $13 billion. The bulk of that represents European Lafarge S.A. and Holcim Group assets, plus the entire Holcim (Canada) Inc. enterprise, acquired immediately after the merger creating LafargeHolcim Ltd. Now operating within CRH Americas as CRH Canada Group, the Holcim (Canada) package brought 3 million tons of cement capacity, a sizable portion integrated with concrete businesses on both sides of the U.S.-Canada border. With the addition of 8 mil- lion-plus tons of Ash Grove mill capacity, Oldcastle Materials is poised to apply to U.S. and Canadian cement markets growth models proven in aggregates, ready mixed and precast concrete, and asphalt production. In CRH strategy terms, it's called "extracting the benefits of scale." EDITORIAL BY DON MARSH dmarsh@concreteproducts.com SEMCO PUBLISHING CORPORATE OFFICE 8751 East Hampden Avenue, Suite B-1 Denver, Colorado 80231 U.S.A. P: +1.303.283.0640 F: +1.303.283.0641 PRESIDENT/PUBLISHER Peter Johnson, pjohnson@semcopublishing.com EDITOR Don Marsh, dmarsh@concreteproducts.com ASSOCIATE EDITOR Josephine Smith, jsmith@semcopublishing.com PRODUCTION MANAGER Dan Fitts, dfitts@semcopublishing.com GRAPHIC DESIGNER Michael Florman, mflorman@semcopublishing.com PROJECT MANAGER Tanna Holzer, tholzer@semcopublishing.com CIRCULATION Juanita Walters, jwalters@semcopublishing.com SALES U.S., CANADA SALES Bill Green, bgreen@concreteproducts.com Tel +1 414 212 8266 GERMANY SALES Gerd Strasmann, strasmannmedia@t-online.de Tel +49 2191 93 1497 SCANDANAVIA, UNITED KINGDOM AND WESTERN EUROPE SALES Jeff Draycott, jeff.draycott@womp-int.com Tel +44 (0) 786 6922148 Colm Barry, colm.barry@telia.com Tel +46 (0) 736 334670 JAPAN SALES Masao Ishiguro, ma.ishiguro@w9.dion.ne.jp Tel +81 (3) 3719 0775 AUSTRALIA/ASIA SALES Lanita Idrus, lidrus@asiaminer.com Tel +61 3 9006 1742 Concrete Products, Volume 70, Issue 10, (ISSN 0010-5368, USPS 128-180) is published monthly by Mining Media Inc., dba Semco Publishing, 10 Sedgwick Drive, Englewood, Colorado 80113. 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For microform availability, contact ProQuest at 800-521-0600 or +1.734-761-4700, or search the Serials in Microform listings at www.proquest.com. POSTMASTER: Send address changes to Concrete Products, PO Box 828, Northbrook, IL 60065-0828. REPRINTS: Concrete Products, 8751 East Hampden Avenue, Suite B1, Denver, CO 80231 USA; P: +1.303.283.0640 ext. 207, F: 1+303.283.0641, www.concreteproducts.com PHOTOCOPIES: Authorization to photocopy articles for internal corporate, personal, or instructional use may be obtained from the Copyright Clearance Center (CCC) at +1.978.750.8400. To obtain further information, visit www.copyright.com COPYRIGHT 2017: Concrete Products ALL RIGHTS RESERVED Circuation audited by Official Media Partner 4 • October 2017 www.concreteproducts.com Ash Grove a sure bet for CRH model of "extracting the benefits of scale"