Crh Plc · NYSE:CRH

Crh — Merger or Acquisition (February 2015)

33 slides from Crh's merger presentation, Feb 2, 2015

  1. Slide 1: Acquisition of assets being disposed of by Lafarge and Holcim

    Strictly confidential Acquisition of assets being disposed of by Lafarge and Holcim 2 February 2015 0

  2. Slide 2: Disclaimer (1/2)

    Disclaimer (1/2) THIS PRESENTATION IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES (INCLUDING ITS TERRITORIES AND DEPENDENCIES, ANY STATE OF THE UNITED STATES AND THE DISTRICT OF COLUMBIA), AUSTRALIA, CANADA, JAPAN OR SOUTH A

  3. Slide 3: Disclaimer (2/2)

    Disclaimer (2/2) MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS PRESENTATION (INCLUDING THE APPENDICES) AND THE TERMS AND CONDITIONS SET OUT HEREIN IS FOR INFORMATION PURPOSES ONLY AND IS DIRECTED ONLY AT: (A) PERSONS IN MEMBER STATES OF THE EUROPEAN ECONOMIC AREA ("EEA") W

  4. Slide 4: 1 global deal … 4 regional platforms

    1 global deal … 4 regional platforms Acquiring high quality assets Financed by mix of existing cash, debt across 4 regional platforms and 9.99% equity placing  Regions  CRH 2014E net debt / EBITDA 3.2x – Western Europe – North America post-transaction – Central & Eastern – Emerging Europe Markets

  5. Slide 5: Deal Dimensions - Assets being acquired

    Deal Dimensions - Assets being acquired N. America W. Europe CEE Emerging Total Locations # ~85 ~490 ~100 ~10 ~685 Employees # ~3,000 ~8,000 ~2,500 ~1,500 ~15,000 Cement plants # 3 9 5 7 24 Cement capacity mt 3.7 12.3 9.8 10.1 36 Cement volumes mt 2.9 7.4 4.3 8.0 23 Aggs volumes mt 16 59 4 – 79 RMC

  6. Slide 6: Leading Market Positions in Regional Platforms

    Leading Market Positions in 4 Regional Platforms Cement Aggregates RMC Asphalt Market position North America Canada Regional #1 Great Britain #1 Western France #3 Europe Germany Regional leader Romania #3 Central and Slovakia #1 Eastern Europe Hungary #2 Serbia #2 Emerging Philippines #2 Markets Bra

  7. Slide 7: Industry Position Post-Acquisition

    Industry Position Post-Acquisition Global #3 building materials player Global #2 in aggregates 50 Aggregates 170 mt CRH ** 40 Aggregates Enterprise Value, €bn 249 mt CRH + NewCo 30 20 Doubling cement volume 10 Cement 19 mt CRH ** 0 Cement 42 mt CRH + NewCo Source: FactSet (Enterprise Value = Market

  8. Slide 8: Strategic Rationale

    Strategic Rationale 7

  9. Slide 9: Strategic Rationale

    Strategic Rationale 1 Quality portfolio of assets  4 strong growth platforms … leading market positions  Geographically diverse portfolio 2 Strong strategic fit  3 platforms integrate well with existing CRH networks  Emerging market platform … entry points of scale 3 Right time for CRH  Trough

  10. Slide 10: Quality assets - balancing CRH's global footprint

    1 Quality assets - balancing CRH’s global footprint US Canada W. Europe CEE Emerging CRH NewCo CRH + NewCo Illustrative EBITDA Split* 5% 10% 6% 19% 23% 8% 38% 31% 56% 13% 36% 45% 8% 2% Platforms of scale in developed and developing markets * Illustrative EBITDA split: CRH split includes share of Asi

  11. Slide 11: Strategic fit - North America

    2 Strategic fit - North America  Northeast US is CRH’s most profitable market – 40% of US Revenue – #1 in Asphalt, #1 in Aggs, #1 in Building Products CRH core market CRH asset  Great fit with CRH’s NE Materials operations NewCo market NewCo asset – Well-located resource-backed Aggs assets – Cemen

  12. Slide 12: Strategic fit - Western Europe

    2 Strategic fit - Western Europe CRH markets Great Britain Both  Market leading positions in cement, aggs, asphalt, RMC  Resource-backed integrated businesses  Enhanced network benefits – W Europe cement France  Strengthens integrated business in Northeast FR / BE / NL  Increased pull-through d

  13. Slide 13: Strategic fit - Central and Eastern Europe

    2 Strategic fit - Central and Eastern Europe CRH markets Romania NewCo markets  Top 3 integrated player in consolidated market Both  Well-located resource-backed assets  EU funding to drive construction growth Slovakia - Hungary  Market leader … Cement: #1 SK; #2 HU; RMC: top 3  Cement usage at

  14. Slide 14: Strategic fit - Emerging Markets

    2 Strategic fit - Emerging Markets Philippines  New platform for CRH in Asia, expanding beyond India & China  #2 position in Philippines market  Construction growth forecast* 11% CAGR 2015-2020  Cement volumes 5.2mt Brazil  Top 5 position in the southeast  Major supplier to Rio de Janeiro mark

  15. Slide 15: Right time in cycle to acquire assets

    3 Right time in cycle to acquire assets Global economies emerging from crisis North America  Good momentum in US; Canada stable Europe  Markets normalising – early stages of recovery  Self-help / synergies key in early part of cycle  CEE significant construction needs Emerging markets  Infrastr

  16. Slide 16: Right time in cycle to acquire assets

    3 Right time in cycle to acquire assets Heavyside sector earnings at cyclical low … … and industry margins at trough € billions Heavyside Sector EBITDA* % Global Peers EBITDA margin % 25 22 20 20 -44% -27% 15 18 10 16 5 0 14 1998 2000 2002 2004 2006 2008 2010 2012 1998 2000 2002 2004 2006 2008 2010

  17. Slide 17: Right time in cycle to acquire assets

    3 Right time in cycle to acquire assets CRH cost of debt All-time-low cost of funds % CRH weighted average cost of gross debt  In 2012 … CRH average cost of debt >5% 6.0 €500m @ 5% CRH Bond issuance  c€3bn Public Debt issuances 2012-2014 5.5  Declining Average cost of CRH debt €750m @ 3.125% 5.0

  18. Slide 18: Creating value - €90m synergies identified

    4 Creating value - €90m synergies identified Synergies € 90m  €30m in year 1 10 Structural  Rising to €90m(net) run-rate 20 Process in year 3 € 60m  Synergies estimated at 5 1.8% NewCo sales 15  Procurement, process and structural benefits € 30m 5 60 Procurement ‒ Operational 40 ‒ Commercial 25

  19. Slide 19: Synergy opportunity across multiple categories

    4 Synergy opportunity across multiple categories Year 3 synergies Procurement Internal sourcing / procurement leverage benefits c€30m – Cement: 3mt … savings of €5 to €10 /t = ~€25m – Aggregates: 8mt … savings €0.50 - €1 /t = ~€5m Integrated procurement programmes CRH+NewCo c€30m €60m – Transport …

  20. Slide 20: Synergy opportunity across multiple categories

    4 Synergy opportunity across multiple categories Year 3 synergies Process Ops improvement/reduced costs through combined technical services – NewCo Synergies – Global spares policy – Better run-times and efficiencies – Process improvements/management in NewCo downstream €20m – Reverse Synergies (CRH

  21. Slide 21: Creating value - CRH experience and track record

    4 Creating value - CRH experience and track record APAC Switzerland and Finland  Major expansion of US asphalt and US  Initial investment €0.7bn at ~7x EBITDA aggregates business … $1.3bn EV  Step-out into 2 new regional cement platforms  1 deal … 6 regional platforms over 18 month period  Syne

  22. Slide 22: Maximising returns through capital efficiency

    5 Maximising returns through capital efficiency Capital Efficiency Reallocation of capital at attractive multiples  €930m* of divestments at 11.0x EBITDA since mid-2014  Recycling capital at higher returns On-going portfolio management  Continuing to deliver on current divestment programme  Port

  23. Slide 23: CRH Heavyside Materials Returns

    5 CRH Heavyside Materials Returns ROIC* 16% Return on Invested Capital Peers CRH CRH Heavyside Materials 12% 8% 4% 0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013  History of superior performance in heavy building materials – Well-located resource-backed assets – Operationa

  24. Slide 24: Financial rationale

    Financial rationale 23

  25. Slide 25: 2014E Revenue and EBITDA bridges

    2014E Revenue and EBITDA bridges Revenue € bn EBITDA € bn 25 2.4 0.2 2.4 0.6 24.0 24 0.4 0.1 3.1 2.2 0.3 22 2.0 1.0 1.8 0.2 20 18.9 1.6 1.6 18 5 1.0 CRH North W. CEE Emerging CRH+ CRH North W. CEE Emerging CRH+ America Europe NewCo America Europe NewCo Revenue up by 27% and EBITDA by 46% 24

  26. Slide 26: ROIC in line with CRH WACC in 2016

    CRH discipline maintained ROIC in line with CRH WACC in 2016 High-teen return on equity in 2016 RONA in line with previous returns generated by CRH c25% EPS accretion in 2016 Bringing returns back to peak 25

  27. Slide 27: Financing structure

    Financing structure €bn Key terms  Class 1 transaction  Completion expected in mid-2015 subject to 1.5 equity – CRH shareholder approval – Completion of the Lafarge-Holcim merger – Completion of Lafarge-Holcim local reorganisations 3.0 debt Financing  Equity placing of c€1.5bn (9.99%)  Senior un

  28. Slide 28: Debt metric impact (basis 2014E)

    Debt metric impact (basis 2014E) €bn Impact of Anticipated impact from NewCo transaction CRH divestment programme ~1.4 2.0 3.0 7.5 6.1 2.5 Net debt* Acquisition Cash from Net debt Anticipated Net debt pre- debt balance post- divestment post- transaction sheet transaction programme divestment proceed

  29. Slide 29: Proposed placing

    Proposed placing Fully underwritten Unconditional upon acquisition completing New shares will rank pari passu with existing shares New shares will be issued cum-dividend 28

  30. Slide 30: Expected transaction timetable

    Expected transaction timetable 2 Feb 2015 Acquisition announcement Equity placing February Class 1 circular published March EGM to approve the acquisition June Lafarge/Holcim merger closes Mid-2015 Completion 29

  31. Slide 31: Trading update

    Trading update On 11 November 2014, CRH announced its interim management statement outlining its trading performance in the first nine months of the year, in which it stated that: Assuming normal weather patterns for the remainder of the year and a US dollar/euro exchange rate of 1.33 (2013: 1.3281)

  32. Slide 32: Summary

    Summary The transaction • 1 global transaction … 4 regional platforms … quality portfolio of assets • Strong strategic fit … become global #3 in building materials • Attractive valuation … right point in the cycle • Options to involve partners in certain regions … being explored Value-creating acqui

  33. Slide 33: Contact us

    Contact us CRH plc Investor Relations Belgard Castle Clondalkin Dublin 22 Ireland Phone: + 353 1 404 1000 Fax: + 353 1 404 1007 Email: ir@crh.com Website: www.crh.com 32

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