Building materials company CRH has agreed a deal to buy a majority stake in Australia's Adbri, which values the company at $1.4 billion.
Adbri, formerly known as Adelaide Brighton, is a building materials business and is listed on the Australian Securities Exchange.
Under the terms of the deal, CRH would partner with Barro, an Australian family-owned business and approximately 43% shareholder of Adbri.
CRH currently has a 4.6% interest in the company and would buy the remaining about 57% of Adbri's shares not owned by Barro with the intention to delist Adbri from the ASX.
CRH and Barro have submitted a non-binding offer of A$3.20 per share for the company, which values it at $1.4 billion (A$2.1 billion).
Adbri recently reported that its 2023 underlying EBITDA is expected to be in a range of A$310-A$315m. Today's offer represents a multiple of about nine times enterprise value to expected 2023 underlying EBITDA.
Albert Manifold, the chief executive of CRH, said the company has held a long-term interest in the Australian construction materials market, which has attractive attributes including stable market dynamics and positive growth prospects.
He said the Australian market is similar in nature to the Southern US and Central and Eastern Europe where CRH has a significant presence.
"Adbri is an attractive business with quality assets that complement our core competencies in cement, concrete and aggregates. With its leading market positions in Australia, we are delighted that this opportunity has presented itself to us," Mr Manifold said.
"It is the next logical step for CRH to expand our existing presence in Australia, where we have been operating for 15 years," he added.
Mr Manifold said today's deal would strongly complement its existing Australian business, creating additional opportunities for growth and development.
"We look forward to working with the Barro family over the coming years to enhance the long-term performance of the business, leveraging our scale, industry knowledge and technical expertise to improve long-term growth and operating performance and drive value to achieve the true potential of the business," he added.
