Cement Roadstone Holdings (CRH)

[TheMotorcycleBoy]

I hold CRH in my foli:

CRH is preparing to move its primary listing of shares to a US-based stock exchange. The group said in its financial results for 2022 that it had come to the conclusion that, “a US primary listing would bring increased commercial, operational and acquisition opportunities for CRH, further accelerating our successful integrated solutions strategy and delivering even higher levels of profitability, returns and cash for our shareholders.” It added that the US market represented around 75% of its earnings before interest, taxation, depreciation and amortisation (EBITDA). It expects that the US will be a ‘key’ driver of future growth for the company, with increases in infrastructure funding, a push for on-shoring of manufacturing activity and high levels of under-build in the residential construction market supporting this outlook.

The group plans to tell its shareholders in further details about the move in exchange. CRH plc will remain headquartered, incorporated and tax-resident in Ireland.

https://www.globalcement.com/news/item/ ... k-exchange

Kinda sad in my opinion. However the SP motored up by at least 10% on the announcement day. I'm curious as to what such a change in listing means for the long term value of my holding, which is currently looking pretty healthy (about +35%). I guess that in the short-term all that will happen is that my stock's ticker will transform to NYSE:CRH and that it will be valued in USD. However I'm wondering what future implications exist, and what the perceived advantage to CRH is, that is whether they proceed to issue more shares on this new market.

Matt

[daveh]

It's possible they may retain a secondary listing on the LSE, or a listing like S32. If it does move entirely to US you'll loss 15% of your Divi ( if it pays a Divi).

[monabri]

Yield is ~2.5%.

A. Manifold got his timing wrong...Albert Manifold the Group CEO sold £2m in shares at £33 in August 2022. This was roughly half his holding by the look of it. Mind you, he is on a stupendously large salary (sorry "compensation" for his valuable time expended at the coal face) for the size of the business.

The reported ROCE is just under 11% . Gross margin 33%, Net 8% (bit low). Earnings were growing at 8% p.a but forecast to slow to 5.5% p.a over the next 3 years.

[TheMotorcycleBoy]

It's possible they may retain a secondary listing on the LSE, or a listing like S32. If it does move entirely to US you'll loss 15% of your Divi ( if it pays a Divi).

I'm not 100% sure whether they'll maintain their UK listing. If they do then would their UK shares get diluted by the US ones?

More to the point, I'm curious as to exactly what they and the share holders gain from the US listing, since the share price marked up by +10% on the announcement date. So presumably it's not an altogether bad move.

Matt

[simoan]

It's possible they may retain a secondary listing on the LSE, or a listing like S32. If it does move entirely to US you'll loss 15% of your Divi ( if it pays a Divi).

I'm not 100% sure whether they'll maintain their UK listing. If they do then would their UK shares get diluted by the US ones?

More to the point, I'm curious as to exactly what they and the share holders gain from the US listing, since the share price marked up by +10% on the announcement date. So presumably it's not an altogether bad move.

Matt

I would expect them to do what Ferguson did last year and change the UK listing from premium to standard. So nothing would change from a UK shareholder perspective, other than maybe the dividend being declared in USD. It would also mean exclusion from the FTSE 100 index.

Although possible, I’d say it’s very unlikely they will completely cancel the LSE listing. They only mention moving the primary listing.

All the best, Si

[TheMotorcycleBoy]

It's possible they may retain a secondary listing on the LSE, or a listing like S32. If it does move entirely to US you'll loss 15% of your Divi ( if it pays a Divi).

I'm not 100% sure whether they'll maintain their UK listing. If they do then would their UK shares get diluted by the US ones?

More to the point, I'm curious as to exactly what they and the share holders gain from the US listing, since the share price marked up by +10% on the announcement date. So presumably it's not an altogether bad move.

Matt

I would expect them to do what Ferguson did last year and change the UK listing from premium to standard. So nothing would change from a UK shareholder perspective, other than maybe the dividend being declared in USD. It would also mean exclusion from the FTSE 100 index.

Although possible, I’d say it’s very unlikely they will completely cancel the LSE listing. They only mention moving the primary listing.

All the best, Si

Thanks Si,

Were that the case, does it imply that their stock will be diluted as they'll be keen to raise more capital on the US market? I guess I'm still trying to see the point of the whole move from their perspective.

Matt

[simoan]

Thanks Si,

Were that the case, does it imply that their stock will be diluted as they'll be keen to raise more capital on the US market? I guess I'm still trying to see the point of the whole move from their perspective.

Matt

I’m no expert on such matters, but my understanding is that the number of shares stays the same. The dual listing just means the shares can be traded on two different exchanges. So in theory it should improve liquidity.

From the company’s perspective the NYSE listing gives them easier access to US capital markets. I imagine the boost in the share price is the market recognising CRH will attract a higher rating on the US market in line with its peer group.

All the best, Si

[TheMotorcycleBoy]

Thanks Si,

Were that the case, does it imply that their stock will be diluted as they'll be keen to raise more capital on the US market? I guess I'm still trying to see the point of the whole move from their perspective.

Matt

I’m no expert on such matters, but my understanding is that the number of shares stays the same. The dual listing just means the shares can be traded on two different exchanges. So in theory it should improve liquidity.

From the company’s perspective the NYSE listing gives them easier access to US capital markets. I imagine the boost in the share price is the market recognising CRH will attract a higher rating on the US market in line with its peer group.

All the best, Si

Thanks for posting these insights. Watch this space!

Matt

[Dod101]

Thanks Si,

Were that the case, does it imply that their stock will be diluted as they'll be keen to raise more capital on the US market? I guess I'm still trying to see the point of the whole move from their perspective.

Matt

I’m no expert on such matters, but my understanding is that the number of shares stays the same. The dual listing just means the shares can be traded on two different exchanges. So in theory it should improve liquidity.

From the company’s perspective the NYSE listing gives them easier access to US capital markets. I imagine the boost in the share price is the market recognising CRH will attract a higher rating on the US market in line with its peer group.

All the best, Si

Thanks for posting these insights. Watch this space!

Matt

The regulatory regime is said to be much less onerous in NY. That is one reason why ARM chose to relist in NY rather than London.

Obviously CRH is one of several companies which have moved to NY in recent years and it is worrying because financial services is one of our (few) success stories. The LSE had better get its finger out and start lobbying pronto.

There is no immediate implication that the stock will be diluted just because they are moving their primary listing to New York. They could easily raise capital in London if that were its primary objective in making the move.

Dod

[simoan]

The regulatory regime is said to be much less onerous in NY. That is one reason why ARM chose to relist in NY rather than London.

Obviously CRH is one of several companies which have moved to NY in recent years and it is worrying because financial services is one of our (few) success stories. The LSE had better get its finger out and start lobbying pronto.

There is no immediate implication that the stock will be diluted just because they are moving their primary listing to New York. They could easily raise capital in London if that were its primary objective in making the move.

Dod

For the record, ARM are not choosing to list in the US, it is their owner, SoftBank, a Japanese company. The reason is nothing to do with the LSE. The LSE are not responsible for the regulatory regime, that is down to the FCA. I have read that the specific regulations that put SoftBank off listing ARM on the LSE were to do with Related Party Transactions. Now, IMHO the FCA is one of the dumbest organisations I have ever come across but as a holder of many UK shares I am very glad these regulations exist.

On a wider point, the UK is a technological backwater. All of ARMs revenues are in USD and none of its licensing customers are UK companies. If you are selling anything, you’d want to achieve the best price possible and that wouldn’t happen with a UK listing. I don’t think they were ever serious about the primary listing being in London because it makes no sense. They were just paying political lip service.

[Dod101]

The regulatory regime is said to be much less onerous in NY. That is one reason why ARM chose to relist in NY rather than London.

Obviously CRH is one of several companies which have moved to NY in recent years and it is worrying because financial services is one of our (few) success stories. The LSE had better get its finger out and start lobbying pronto.

There is no immediate implication that the stock will be diluted just because they are moving their primary listing to New York. They could easily raise capital in London if that were its primary objective in making the move.

Dod

For the record, ARM are not choosing to list in the US, it is their owner, SoftBank, a Japanese company. The reason is nothing to do with the LSE. The LSE are not responsible for the regulatory regime, that is down to the FCA. I have read that the specific regulations that put SoftBank off listing ARM on the LSE were to do with Related Party Transactions. Now, IMHO the FCA is one of the dumbest organisations I have ever come across but as a holder of many UK shares I am very glad these regulations exist.

On a wider point, the UK is a technological backwater. All of ARMs revenues are in USD and none of its licensing customers are UK companies. If you are selling anything, you’d want to achieve the best price possible and that wouldn’t happen with a UK listing. I don’t think they were ever serious about the primary listing being in London because it makes no sense. They were just paying political lip service.

I know that and obviously I was writing loosely about ARM choosing to list in NY. It is obvious that it would be their owner doing so although I cannot believe that they would be applying to do so without discussing the matter with ARM. And I never claimed that the LSE were responsible for the regulatory regime but they should still be lobbying companies to list on the LSE. That is their main business after all.

Dod

[simoan]

And I never claimed that the LSE were responsible for the regulatory regime but they should still be lobbying companies to list on the LSE. That is their main business after all.

Dod

Again, if you're talking about London Stock Exchange Group (the company), this is incorrect. LSEG is now a data business since the acquisition of Refinitiv. The capital market equity side of the business represents a small fraction of revenues. For FY22, revenue from the equity business was £248m out of total revenue of £7,743m. There's a reason Microsoft recently bought 4.2% of the company.

With regard to CRH, it's an Irish company which reports in USD and does the majority of its business in the US. There's no good reason for it to have a premium listing in the UK. I can't imagine Brexit helped in this situation.

[Dod101]

And I never claimed that the LSE were responsible for the regulatory regime but they should still be lobbying companies to list on the LSE. That is their main business after all.

Dod

Again, if you're talking about London Stock Exchange Group (the company), this is incorrect. LSEG is now a data business since the acquisition of Refinitiv. The capital market equity side of the business represents a small fraction of revenues. For FY22, revenue from the equity business was £248m out of total revenue of £7,743m. There's a reason Microsoft recently bought 4.2% of the company.

With regard to CRH, it's an Irish company which reports in USD and does the majority of its business in the US. There's no good reason for it to have a premium listing in the UK. I can't imagine Brexit helped in this situation.

How do I ask this poster to give it a rest, without being accused of 'Playing the man, not the ball'

[simoan]

And I never claimed that the LSE were responsible for the regulatory regime but they should still be lobbying companies to list on the LSE. That is their main business after all.

Dod

Again, if you're talking about London Stock Exchange Group (the company), this is incorrect. LSEG is now a data business since the acquisition of Refinitiv. The capital market equity side of the business represents a small fraction of revenues. For FY22, revenue from the equity business was £248m out of total revenue of £7,743m. There's a reason Microsoft recently bought 4.2% of the company.

With regard to CRH, it's an Irish company which reports in USD and does the majority of its business in the US. There's no good reason for it to have a premium listing in the UK. I can't imagine Brexit helped in this situation.

How do I ask this poster to give it a rest, without being accused of 'Playing the man, not the ball'

Why? Do you not like facts?

[TheMotorcycleBoy]

Hi Folks,

I've just received the following Corp Action notification in my SIPP regarding my CRH shares:

Scheme of Arrangement.

1 New Depositary Interest CRH PLC (CRH) for each Existing Crest Depository Interest share (CDIs) held.

Important Information & Other Key Dates:

On the 9th May 2023, CRH announced its intention to change its listing on the London Stock Exchange (LSE) from premium to standard listing and move its main listing to the New York Stock Exchange (NYSE). This is to be done by way of a Scheme of Arrangement.

The reason for the change that North America now represents approximately 75 percent of CRH's business and is expected to be the key driver of future growth.

The Scheme of Arrangement received shareholder approval at the Extraordinary General Meeting held on the 8th June 2023.

The last day of dealing of the CDIs on the LSE is expected to be the 22nd September 2023 and the New Depositary Interest are expected to start trading on the 25th September 2023.

The new Depositary Interests are expected to be credit to your account on or after the 25th September 2023 in exchange of your existing CDIs.

Should you wish to find more information about the Scheme, please visit the CRH website, https://www.crh.com/.

I've not received anything like this before. Does it just mean that my LSE:CRH are exchanged for a new instrument possibly one of these https://www.londonstockexchange.com/mar ... c/overview ?

Can anyone on here help with this type of action?

thanks Matt

[yorkshirelad1]

I'm hoping this will be useful if they declare and pay dividends as a US company and therefore have US withholding tax. I hold CRH in a taxable account, and the US witholding tax would be covered by W8-BEN. Currently, the shares pay an Irish dividend and the Irish witholding tax is very problematic to reclaim.