CRH acquisitions in Ukraine poses huge risks for future needs

BUILDING material giant CRH has been granted too much control over supply in Ukraine according to Sergii Pylypenko, head of building materials group Kovalska.

Speaking to The Financial Times, Pylpenko said the CRH recent acquisition of cement plants “contains huge risks for the future needs of Ukraine” as it gives the US-listed company an almost 50 per cent local market share.

The building market in Ukraine is expected to see a boom should peace be established with Russia.

Ukraine’s supreme court will hear a case by Kovalska – the state’s biggest cement consumer – in September arguing that a competition regulator erred last year in approving CRH’s €100mn purchase of the Ukrainian assets from Dyckerhoff, a unit of Italy’s Buzzi.

CRH has been an investor in Ukraine for 26 years, and said the deal had been approved after “an extensive review process involving consultation with stakeholders, customers and other market participants.”

Ukraine’s anti-monopoly committee (AMCU) required CRH to divest at least 25 per cent of the assets to an independent investor, given that the company and Ukraine’s second-largest cement maker, Ivano-Frankivsk, would control most of Ukraine’s supply.

The regulator said CRH’s combined market share was 46 per cent. Industry sources suggest it is below 40 per cent, based on installed capacity.

The AMCU in June named Divinereach, a newly incorporated vehicle of Ireland’s O’Reilly business family, as the approved investor.