Holcim cements North America push with $1.29 billion acquisition of roofing company By Reuters
© 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
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:) 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.
“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.
