CRH’s Active Portfolio Management Strategy Continues With $1.9 Billion Acquisition; FVE Maintained

Narrow-moat CRH’s acquisition of Barrette Outdoor Living, North America's leading provider of residential fencing and railing solutions, is consistent with its active portfolio management and bolt-on acquisition strategy. We view the $1.9 billion price as fair, which translates into an enterprise value/EBITDA multiple of 10 times presynergies, less than the multiple received for the $3.8 billion divestment of its Building Envelope business, announced in February, which will help fund the deal. CRH’s balance sheet will remain healthy following the acquisition and not impact the group’s ongoing share repurchases. We maintain our Exemplary capital allocation rating and reiterate our GBX 3,550 fair value estimate. We view CRH as the most defensive of the European building manufacturers under our coverage and an undervalued play to get exposure to U.S. infrastructure spending.