SigmaRoc PLC (AIM:SRC) shares have been suspended after the acquisitive building materials firm agreed to buy a group of European lime businesses from CRH PLC (LSE:CRH, NYSE:CRH) for up to €1 billion (£870 million), which will be classed as a reverse takeover.
In a separate statement, CRH confirmed it was selling 16 operating locations with leading market positions across Ireland, the UK, Germany, Czech Republic and Poland, with generated combined sales of roughly US$610 million (£488 million) and EBITDA of circa US$137 million in 2022.
The acquisition element of the deal is split into two parts, with the principal ‘Deal 1’ targets valued at €745 million (£645 milion) that SigmaRoc said it planned to pay via a €230 million fundraising, the drawing down of €350 million from a new €750 million banking facility, and a €75 million deferred payment, with the difference seemingly covered by adjustments in the assignment of a German intercompany loan.
The fundraising of roughly £200 million will be priced at 47.5p, slightly more than a 5% discount to the 50.2p closing share price yesterday, and mostly in the form of an institutional placing, with a portion for retail investors via an intermediaries offer on the REX platform. CRH and the directors of SigmaRoc also intend to take part in the placing.
Shareholder approval will be required for the Deal 1 targets, with a meeting scheduled for 11 December.
Making up the rest of the €1 billion are two call options with an aggregate consideration payable by SigmaRoc of roughly €255 million (£220 million).
Exercising both these call options would result in the deferred consideration rising to €175 million and the amount to be financed by debt rising to around €505 million.
If the call options are exercised, the acquisitions are expected to be earnings enhancing in the first full year post completion, the company said, and making the group the largest lime producer in key markets of Finland, Sweden, Norway, the UK and Ireland with pro forma revenue above £1 billion and with underlying EBITDA at £211 million.
With lime and limestone seen as key resources in the transition to a more sustainable economy, with lime products also natural carbon sinks, the lime market is expected to continue to grow to €1.9 billion in 2031 across SigmaRoc’s expected markets, driven by increased demand from construction and steel industries.