Irish building products business CRH (CRH) is one of the largest gainers on the FTSE 100 this morning following the publication of an interview in the The Irish Times with chief executive Albert Manifold in which he outlined several options for maximising shareholder value.
The shares are up 2.1% to £24.76 after Manifold mooted a number of ways of enhancing value including share buybacks and separately listing a part of its US business.
The latter outcome was pitched as a possibility by analysts at Deutsche Bank in March, citing growing shareholder interest, however their counterparts at stockbroker Davy reckon the latter outcome is unlikely.
They comment: ‘That type of a spin-off would impact on savings the group achieves from centrally procuring goods and services. Procurement savings, in particular, appear significant with about $14bn of products and services bought in the US alone where the group is saving c.2.5-3%.’
Such a move would also seem at odds with the company’s long-standing strategy of being diversified across different products, geographies and end-uses to soften the impact of fluctuating demand at different points of the economic cycle.
However, it is no surprise Manifold is feeling under pressure to address a share price which has slumped 20% in the last 12 months.
You can read our thoughts on the investment case at CRH in this article. The company is set to update on first quarter trading on 25 April.
