Building materials group CRH has hired Bank of America to launch the sale of its European distribution business in a deal valuing the unit at about €2 billion – including debt.
This is according to sources familiar with the matter.
The sale is expected to kick off next month and has already drawn interest from a series of buyout funds including Advent, Lone Star and CVC, the sources said.
Lone Star, which owns Nordic building materials supplier Stark, is also working on a similar deal to buy Saint Gobain's Raab Karcher business which specialises in providing building materials to the German market.
The sources said CRH has been closely monitoring Saint Gobain's divestiture and was waiting for the auction to enter its final stages before putting its own distribution business on the block as it would appeal to the same bidders.
CRH is due to provide a trading update on April 24, with management possibly announcing plans to offload the unit which operates in Germany, France, Switzerland and the Benelux.
The division has core earnings of €181m and could fetch a valuation of about €2 billion, representing a multiple of 11 times its core earnings.
Dublin-based CRH put the entire unit under review last year as part of a plan to streamline its operations and boost growth.
While the whole group saw its core earnings rise by 7% to €3.3 billion last year, the European distribution business was underperforming, with core earnings down 1%.
One of the sources said CRH needs to find a new owner who could turn around the division ahead of a possible recession that would have painful consequences for the building industry.
CRH has been ruthless in recent years in dumping businesses it did not feel were delivering high enough returns and chasing more attractive ones as it aims to improve its EBITDA margin by 300 basis points by 2021, a target announced a year ago.
CRH boss Albert Manifold said in February that the company had sold 35% of all businesses it owned when he took over in 2013 and that over half of 2018's record year of profitability was delivered with businesses it acquired over the same period.
In 2017 the firm sold its US distribution business, known as Allied Building Products, to Beacon Roofing Supply for $2.6 billion in cash and used the proceeds to fund the €3 billion purchase of Ash Grove Cement in 2018.