By John Revill and Noele Illien
ZURICH -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 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.