Shares in CRH (LON:CRH) have lost ground in London this morning as it emerged that the company’s takeover target Ash Grove Cement had received a rival bid. The news comes after the UK group recently agreed to buy the US cement company for $3.5 billion as it looks to expand its footprint in North America.
As of 10:21 BST, CRH’s share price had lost 1.49 percent to 2,768.00p, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.12 percent higher at 7,517.00 points. The group’s shares have added just under five percent to their value over the past year, but are down by a little over two percent in the year-to-date.
Kansas-based Ash Grove announced in a statement yesterday that it had received a preliminary, non-binding competing proposal from a third party, at an indicated enterprise value of between $3.7 billion and $3.8 billion.
“The board of directors of Ash Grove has determined that such proposal could reasonably be expected to result in a superior proposal and has determined to engage with such third party regarding its proposal,” the company said in the statement.
CRH, which has offered $3.5 billion for Ash Grove, noted the US group’s announcement in a short statement, adding that the period for obtaining Ash Grove shareholder approval had been extended.
Reuters quoted Davy Stockbrokers analyst Robert Gardiner as commenting that the emergence of an eleventh-hour bidder was “perhaps not surprising given Ash Grove’s attractive position in the US cement market”. He added that the FTSE 100 company had little choice but to wait for Ash Grove to evaluate the proposal before deciding whether to improve its offer.