LafargeHolcim has inked an settlement to snap up US-based business roofing firm Firestone Constructing Merchandise from Bridgestone Americas, in a deal valued at $3.4 billion. Shares jumped 4.6% in UK buying and selling.
The world’s largest cement maker will finance the acquisition with money and debt whereas sustaining web debt beneath 2x. Following the transaction, LafargeHolcim (0QKY) tasks to generate $110 million in annual synergies on a run-rate foundation inside two years of its closure, which is anticipated within the second quarter. The acquisition is earnings per share (EPS) accretive from the primary yr, the corporate mentioned.
With this deal, LafargeHolcim seeks to broaden its footprint within the US, its greatest market, and increase annual web gross sales to greater than $6 billion.
Firestone Constructing Merchandise, which specialises in business roofing and constructing envelope options within the US, had estimated web gross sales of $1.8 billion and EBITDA of $270 million in 2020.
“With Firestone Constructing Merchandise we’re strengthening our greatest market, the US, whereas additionally constructing a world development and innovation platform for the corporate,” Jan Jenisch, LafargeHolcim’s CEO, commented. “At the moment’s milestone is a strategic leap on our journey to develop into the worldwide chief in modern and sustainable constructing options, to construct a world that works for folks and the planet.”
With this acquisition, LafargeHolcim will add 15 manufacturing amenities, 1,800 distribution factors, and three R&D laboratories to its community.
Trying forward, the cement maker mentioned that will probably be specializing in cross-selling alternatives and additional bolt-on acquisitions to broaden the flat roofing techniques enterprise to Europe and Latin America.
“A possible acquisition on this area must also increase the ESG [Environmental, Social, and Corporate Governance] credentials of the corporate as a provider of vitality saving merchandise within the constructing and building sector,” Citigroup Inc. analysts wrote in a notice to traders. The funding financial institution not too long ago raised the inventory’s value goal to €54.47 and reiterated a Purchase score. (See LafargeHolcim stock analysis on TipRanks)
With shares up 22% over the previous three months, the inventory nonetheless scores a Robust Purchase analyst consensus primarily based on 8 current Purchase rankings versus only one Maintain. In the meantime, the common price target of €51.46 implies upside potential of seven.9% over the approaching 12 months.