HeidelbergCement AG agreed to sell its brick and roof-tile business to Dallas-based Lone Star Funds for $1.4 billion, as it looks to cut debt and return its focus to core products such as cement and aggregates.
The sale of Hanson Building Products includes North American assets outside of western Canada as well as operations in the U.K., the Heidelberg, Germany-based cement maker said in a statement today. The price includes a payment of as much as $100 million from Lone Star that’s dependent on the performance of the business in 2015.
The sale of the unit has been timed to take advantage of a recent recovery in U.K. construction markets, making building materials more attractive to private equity buyers. Lone Star has targeted unwanted building-products businesses, buying a gypsum-wallboard maker from France’s Lafarge SA last year.
HeidelbergCement chief executive officer Bernd Scheifele is trying to cut debt after his company joined a debt-fueled acquisition spree by cement and concrete makers, which sought rapid global expansion and diversification into markets such as building products.
It purchased Hanson plc, a British building materials company, for about $18.3 billion in 2007 with returns from the deal damaged by the subsequent financial crisis. Heidelberg’s current market value is 11 billion euros ($13.4 billion).
Construction orders in the U.K. during the third quarter increased by 3.2 percent year-on-year, according to the Office for National Statistics. Scheifele said last month that U.K. brick sales were particularly strong. U.S. construction spending in October rose 1.1 percent from September, though data on housing market shows a recovery has yet to gain steady traction.
For coverage on the building materials space, see Experts Corner: Growth in Construction Sector Spurs M&A in Building Products