Building materials group CRH has confirmed that it is in discussions which may lead to it taking a 25 per cent stake in Israel's monopoly cement producer. If the discussions are successful, it will be CRH's first investment in the Middle East.

The cost of the shareholding in Mashav, the parent company of Nesher Israel Cement Enterprises, has not been disclosed but reports from Jerusalem value the stake at $200 million (€225 million). It is understood that while CRH initially plans to take a 25 per cent stake, any agreement with Clal Industries, owner of Mashav, will include an option to increase this to 50 per cent.

CRH general manager-finance Mr Myles Lee confirmed that talks with Clal Industries have restarted after being abandoned last year. He emphasised that there is no guarantee that the current negotiations with Clal will lead to the purchase of 25 per cent of Mashav. CRH has been involved in onoff negotiations with Clal and last year was involved in talks on taking a 50 per cent interest in Nesher. It is understood that those talks broke down on the issue of price with Clal valuing Nesher at $850 million (€950 million) - in effect looking to CRH to invest €475 million for a 50 per cent stake.

Now Clal has accepted that it will have to accept a lower price if is to find a buyer for Nesher. For its part, CRH seems to be adopting a more cautious approach with any deal restricted to an initial 25 per cent stake. Mr Lee declined to comment on the current volatile situation in Israel and Palestine. It is understood, however, that cement sales in the areas governed by the Palestinian Authority last year were more than 300 million shekels (€31 million). These Palestinian sales accounted for about 20 per cent of Nesher's total sales and are thought to have been severely disrupted by the escalating violence in the West Bank and the Gaza strip.