The U.S. Federal Trade Commission (FTC) cleared the path for CRH plc to acquire Overland Park, Kan.-based Ash Grove Cement for $3.5 billion after the company agreed to divest facilities in three states.
To win antitrust approval for the deal, Dublin-based CRH will sell a Three Forks, Mont., cement plant and quarry to GCC Americas; three Omaha, Neb., area sand and gravel sites to Martin Marietta Materials; plus, three quarries and two asphalt plants near Kansas City to Summit Materials. The settlement also contains two three-year provisions: It grants GCC an option to use two Three Forks-fed CRH terminals in Alberta; and, holds that CRH, at GCC’s option, will purchase cement from the mill for distribution in Canada.
FTC proposed the settlement after a complaint, filed in U.S. District Court, alleged that the CRH-Ash Grove deal would have a harmful effect on competition for portland cement and aggregates in four states. The proposed acquisition would reduce the number of significant competitors in metro areas, regulators contended, increasing the likelihood that the merged company would unilaterally exercise market power – leading to agencies and consumers paying higher prices for materials. CRH and Ash Grove own Montana’s two sole portland cement plants, for example, and their subsidiaries are leading producers for sand and gravel in the Omaha, Neb./Council Bluffs, Iowa, market, and crushed stone in the Johnson County, Kan., market.
As suitors of the FTC-pinpointed cement, aggregate and asphalt operations, GCC, Martin Marietta and Summit Materials possess what the agency calls “the experience and capability to replace one of the merging parties as a significant competitor in the relevant markets.”
CRH and Ash Grove announced the Agreement and Plan of Merger in September 2017. The deal elevates CRH to a major North American cement producer, with upwards of 10 million tons’ capacity between 10 plants in the United States and Canada. The producer established a significant foothold in portland cement production three years ago, acquiring the Holcim (Canada) business amid the Lafarge Group and Holcim Ltd. merger.
