CRH races Blackstone-CPPIB-Cinven for Holcim, Lafarge assets: Reuters

(Reuters) – Irish cement maker CRH and a consortium led by U.S. private equity firm Blackstone are battling for assets which Lafarge and Holcim must sell ahead of their planned merger, several people familiar with the matter said.

One source said that CRH was seen as the front runner having put forward the highest offer for the assets with a bid of almost 6 billion euros (US$6.8 billion), although it is still too close to call who might win.

The Blackstone consortium, which also includes Cinven and Canada Pension Plan Investment Board (CPPIB), has bid 5.5 billion euros (US$6.3 billion), a second source said.

Two of the people close to the transaction said that the sellers have not yet picked one bidder for exclusive talks, adding that such a step could be taken in the next few days.

One source said the sellers would make a decision on their assessment of transaction security, proposed financing and potential anti-trust issues, as well as price.

France’s Lafarge and Swiss peer Holcim announced merger plans last year, hoping to cut costs and tackle overcapacity and weak demand. The new company will be the world’s biggest cement maker with US$44 billion in annual sales.

CRH confirmed discussions with Lafarge and Holcim in a statement on Thursday, adding a potential acquisition would likely be funded through a combination of existing cash balances, debt and an equity placing.

“At this stage there can be no certainty that these discussions will lead to any transaction,” CRH said.

A person familiar with the process said that CRH had a better opportunity to benefit than buyout groups because it can integrate the assets into its own business, and can therefore offer a higher price.

The companies initially received more than 60 tentative bids from industry and private equity firms for some or all of the assets, which they must sell before completing the merger.

The sources spoke on condition of anonymity because the process is private.

Bankers said the Blackstone consortium was lining up a debt financing of up to 4.5 billion euros, equating to around 5.5 times core earnings of approximately 725-730 million euros, including undrawn debt. They said cash-rich institutional investors, who have a preference for event-driven financing, have a strong appetite for the deal.

A Holcim spokesman said the company would put out a statement later on Thursday.

Lafarge, Blackstone, Cinven, CPPIB and CVC declined to comment.

By Arno Schuetze and Freya Berry

(Additional reporting by Claire Ruckin at IFR and Conor Humphries in Dublin; Editing by Sam Wilkin)

(This story has been edited by Kirk Falconer, editor of peHUB Canada)

Photo courtesy of Lafarge Group