CSR Limited announced today that CSR America had finalised three further acquisitions inthe US: Eastern Shore Concrete Pipe, in Delaware, the Dolese Bros. Companyprestress concrete operation in Oklahoma, and concrete products manufacturer,Moor-Tex Concrete Products, Inc. in Texas.
These latest acquisitions bring to more than US$255 million (A$392 million) the total investment committed to the expansion and development of CSR’s U.S.construction materials and concrete pipe businesses since March 1998. Theacquisitions, including those announced today, include four pipe businesses,two concrete products businesses, four pipeline rehabilitation companies andtwo sand operations (for details, please see attachment).
The Eastern Shore Concrete Pipe plants in Bear and Middletown, Delaware, supply pipe to customers in Delaware, Maryland, Virginia, Pennsylvania and New Jersey. TheDolese Bros. acquisition comprises a prestress bridge beam operation in OklahomaCity. Moor-Tex is a major supplier of concrete manholes and drainagestructures throughout the Houston metropolitan area.
The three acquisitions were made by CSR’s concrete pipe and prestress concrete product business, CSR Hydro Conduit - the largest U.S. concrete pipe manufacturer,and a leading producer of prestressed bridge and building components.Hydro-Conduit operates 74 plants in 29 states across the U.S., and is apision of CSR Limited’s wholly-owned subsidiary, CSR America, Inc. (CSRA).
"The acquisition of the Dolese Bros. prestress operation expands our capacity toaddress the growth in the Oklahoma bridge market," said CSR AmericaChief Executive David Clarke. "It also provides the Prestress pisionwith a strategic link and synergies in relation to our current operations inTulsa, Oklahoma and Marshall, Missouri."
The Prestress pision provides products for end uses such as stadiums,commercial buildings, and parking garages, such as the 11 parking garagesunder construction for the Sprint World Headquarters in Overland Park,Kansas. CSR America currentlyoperates six prestress facilities, in Denver, Colorado; Albuquerque, NewMexico; Marshall, Missouri; Lafayette, Indiana; Henderson, Kentucky; and Tulsa, Oklahoma.
The Moor-Texacquisition strengthens CSR’s product offering to its concrete pipe and boxculvert customers in Houston, San Antonio and Austin, Texas. "This willgive us three operations now in the Houston area," said Mr. Clarke.
CSR Managing Director Peter Kirby said he was pleased with the progress of CSR’s growthplan in the U.S., particularly in concrete pipes.
"Our growth strategy in the U.S. is based on in-fill acquisitions, whichcomplement our integrated construction materials business and on expandingour geographic coverage. In concrete pipes, we are pursuing growth options tostrengthen our position as the number one supplier.
"These acquisitions and developments during the year indicate a satisfactoryimplementation of that strategy. We have also been able to finance thisinvestment internally from our cash flows.
"There are a significant number of opportunities available to us to expand in theU.S. with bolt-on acquisitions, and I am pleased that we are makingprogress," he said.
"The U.S. economy continues to perform strongly, with no real indications of adownturn in construction activity at this stage.
"We are confident that activity levels will remain reasonably strong for at least theforeseeable future," said Mr. Kirby.
"Whilst many commentators are anticipating that a construction slowdown will start tobecome evident late this year or early in 2000, we do not expect that it willbe as severe as in previous years, due to a number of factors, including the45% higher levels of federal infrastructure spending under TEA-21 (theTransport Equity Act for the 21st Century), low inflation andinterest rates and the strength of the domestic economy."
The acquisitions since March 1998 have been at an average forward EBIT multipleof below 6 times. They are all projected to return above their cost ofcapital within 12-24 months.
For further information, please contact: Peter Kirby on (02) 9235 8095 or Debra Stirling on (02) 9235 8040 or 0419 476 546.
US acquisitions, developments and pestments
Major acquisitions, developments and pestments made by CSR America and its pipeand concrete products pision, CSR Hydro-Conduit, since March 1998.
CONCRETE PIPES AND PRODUCTS
With 74 pipe and concrete products plant locations in 29 states across the country,CSR Hydro Conduit is the largest producer of concrete pipe and box culvert inthe U.S.
A new concrete pipe and products facility in Washington, D.C.,is under construction and a plant in Houston, Texas, is in the design phase.Additionally, CSR recently commissioned a new plant in Phoenix, Arizona, anda new plant in Columbia, South Carolina is underway.
Work has also begun on new capacity at CSR Hydro-Conduit’sconcrete pipe plants at Las Vegas, Nevada, and Dallas, Texas, and at theAlbuquerque, New Mexico, pre-stress concrete products plant. Several otherupgrades are planned.
In April 1999, full production commenced at a new US$17 million state-of-the-art, automated technology pipe plant in Miami, Florida, to produce around 200,000 U.S. tons of concrete pipe and products each year.
In March 1999, CSR Hydro Conduit purchased TXI’s Louisiana pipe operations. Previously trading as Louisiana Industries, they produce and sell concrete pipe, box culvert and related products. The deal, which includes plants in Baton Rouge, Alexandria and Bossier City, Louisiana, makes CSR Hydro Conduit the largest concrete pipe manufacturer in the state. The Alexandria facility will be replaced with a new, modern US$7 million plant by the end of 1999, to produce a higher quality product more cost-effectively.
In April 1998, two major pipeline rehabilitation operations were purchased, providing CSR Hydro-Conduit with entry into this industry. They were Pipeliner Systems, Inc. located in Columbus, Ohio, and U-Liner Mid-America of Little Rock, Arkansas.
In April 1998, the Wall Concrete Pipe Company in Paris, Texas, was acquired.
Also in April 1998, the concrete pipe operations of Eagle Precast, Inc. in Tulsa, Oklahoma, were acquired.
QUARRIES, CONCRETE AND CEMENT
CSR America is one of the largest construction materials companies in the U.S.,with concrete and quarrying operations in Florida, Georgia, Nevada,Washington, Oregon and South Carolina. CSRA also has a cement plant and twocement import terminals at ports in Florida.
Around US$100 million has been invested in the past 12 months on modernizing and expanding the Florida cement plant. The US$140 million project will convert the plant to an energy efficient dry production process and is proceeding on schedule, with production to commence in January 2000. The expanded plant will produce around 1 million U.S. tons of cement a year, which is a 60% increase on CSR’s current production capacity. This is equivalent to around 40% of CSR’s current demand in Florida.
A US$3.8 million expansion of the Krome quarry in southern Florida will lift production capacity by 14%.
The Pennsuco concrete block plant in Miami was upgraded and modernized in the six months to March 1999, at a cost of around US$4 million. Block production capacity and volumes have increased by around 110%.
The assets of Union Sand, in south-east Georgia, were purchased in December 1998. Production volume in 1998 was around 480,000 U.S. tons.
Standard Sand in central Florida was purchased in November 1998 for around US$35 million. The acquisition lifted CSR’s market share in the central Florida market by 20%.
In June 1998, the concrete block plant of Las Vegas Block was purchased. This has increased CSR’s block capacity in the Las Vegas market by about 65%.
The Bull Head City pre-mixed concrete plant and sand and gravel operation was pested in December 1998 for close to book value. The business was under-performing and regarded as non-strategic.
The Knox Rivers asphalt construction business in Georgia was pested in May 1999 for close to book value. This was a non-core business which performed below expectations and for which there were no identifiable growth prospects.