Cement Roadstone Holdings (CHR)

CHR has outperformed its benchmark amidst continued deal activity.

In recent months CHR has shown little hesitation for deal-making, as of this morning’s report of another potential acquisition following their announcement on September 21st to acquire Ash Grove Cement (ASHG).

Ash Grove Acquisition

Bloomberg reported on September 20 that CHR had agreed to terms of the $3.5 billion valuation. CHR will reportedly pay $449-$454 per share, which is a 59% premium over the days’ closing price. CHR investors answered with a 2% bump in share price. Research suggests that Dublin based CHR is the leading competitor in the $395 billion cement industry, and coming off their 2015 concrete merger for $7.7 billion dollars shows the company is only looking to grow even larger. CHR’s recent bets in the concrete space reflect their confidence in the U.S. need for infrastructure spending, and whether or not President Trump follows through on his promise for a border wall along the U.S.-Mexico border, the United States is still trillions of dollars behind schedule in infrastructure spending.
(ASHG was advised by J.P. Morgan Securities)

Albert Manifold’s Deal Making

CEO of CHR, Albert Manifold, is not shy of buying and selling. In preparation for the ASHG acquisition, Manifold sold one of CHR’s U.S. businesses for $2.6 billion cash. This valuation came in at 16x EBITDA, which is impressive compared to a 3-year average multiple of 10x on deals in the materials space. This morning Bloomberg reported that CHR was nearing talks to take over the private U.S. cement maker Suwanee for $750 million. CHR stock was unchanged upon release of the news. This deal adds, even more, moving parts the Manifold’s string of deals, however, he is remaining confident in the U.S. concrete industry.

Trump Infrastructure

With the focus in Washington on tax reform, we may not see the administration turn its eyes back to infrastructure for some weeks. With the goal of tax reform by the end of the year, it is reasonable to assume that infrastructure may be the first move by Trump in the new year.

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