IRISH BUILDING SUPPLIES company CRH is expected to save well over €100 million on the sale of some of its US operations because of Trump’s recent tax changes.
The building materials giant, which is Ireland’s largest indigenous firm, announced earlier this week that it is has completed the sale of its Americas distribution division.
At the time of the sale, CRH said that it was offloading the division because it didn’t offer “value adding acquisition opportunities” and it couldn’t see a way to become the market leader in the area.
The firm sold the subsidiary to Beacon Roofing Supply, a US company that sells roofing and building products in North America.
CRH said that the proceeds of the sale would be used to help fund some of its acquisitions in 2017.
The company has said it will spend €4.2 billion buying US cement maker Ash Grove Cement, Suwannee America Cement and German business Fels.
According to a note published this morning by Davy stockbrokers, the Americas distribution business had gross assets of €1.2 billion, while the proceeds from the sale were €2.2 billion.
“That €1 billion gain might have been taxed at 35% under the old tax regime,” the note said.
“At 21%, the tax bill would be €210 million rather than €350 million, indicating a possible saving of €140 miliion by completing the deal on 2 January 2018.”
When discussing the “old regime”, the note was referencing the sweeping tax changes recently introduced under the Trump administration in the US.
The new rules included dramatic tax cuts for corporations and temporary reductions for individuals, and represented the most sweeping rewrite of the US tax code in decades.
The bill received final approval from the Republican-controlled US House of Representatives at the end of December. Under the changes, corporate tax was cut from 35% to 21%.
CRH is the biggest company by turnover in Ireland, with revenues of €27 billion in 2016.
Written by Paul O’Donoghue and posted on Fora.ie