🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Holcim cements North America push with $1.29 billion acquisition of roofing company

Published 02/07/2023, 12:57 AM
Updated 02/07/2023, 10:31 AM
© Reuters. FILE PHOTO: The logo of Swiss cement maker Holcim is seen at its headquarters in Zug, Switzerland October 26, 2022.  REUTERS/Arnd Wiegmann/File Photo
HOLN
-

By John Revill and Noele Illien

ZURICH (Reuters) -Holcim AG, the world's biggest cement maker, has agreed to buy U.S. roofing systems manufacturer Duro-Last in a $1.29 billion deal, the Swiss company said on Tuesday, its latest move to bolster its presence in North America.

Holcim (SIX:HOLN) expects the U.S. Inflation Reduction Act (IRA) to provide strong momentum for its business in the region, and boost its sales to around half of its business from around 40% at present, an executive told Reuters last month.

The deal for privately owned Duro-Last follows other recent acquisitions in North America by Holcim and is its biggest since it bought residential roofing maker Malarkey for $1.35 billion in December 2021.

Michigan-based Duro-Last, which specialises in roofing systems for the commercial building market, has annual sales of roughly $540 million.

The deal is expected to yield synergies of around $60 million per year, mainly from cheaper procurement of materials. The $1.29 billion price tag represents an EBITDA multiple of 7.9 after synergies, Holcim said.

As a result of the acquisition, sales at Holcim's roofing systems division will exceed $4 billion by the end of 2025, it said.

Holcim is looking to boost its roofing business, part of its Solutions & Products business which is more profitable than the rest of its business, and is also less carbon-intensive than cement production.

In the first nine months of 2022 Solutions & Products boasted a recurring operating profit margin of 20%, better than the 16% level for Holcim as a whole.

Shares in were flat in early trading after gaining more than 8% in the last 12 months, outpacing the Swiss Market Index which has fallen 7.6%.

Analysts were positive about the acquisition.

© Reuters. FILE PHOTO: The logo of Swiss cement maker Holcim is seen at its headquarters in Zug, Switzerland October 26, 2022.  REUTERS/Arnd Wiegmann/File Photo

"We are convinced that the acquisition will help Holcim to exceed its target to generate 30% of revenues with its Solutions & Products business by 2025, up from around 19% in 2022.

"In our view, the speed of transformation of Holcim towards an asset-light, more innovative, low-carbon construction solutions provider is not yet fully reflected in its valuation," said Vontobel analyst Bernd Pomrehn.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.