Building materials group CRH yesterday agreed to buy Texan rival MMI Products for about $350 million (€280.9 million). It said the move would add a new product range and accelerate sales growth in the expanding US construction market.

Houston-based MMI is a leading maker and distributor of building products used in the non-residential, residential and infrastructure construction sectors. More than 70 per cent of MMI's sales come from the US non-residential sector, which is benefiting from strong demand. The sector is recovering from the three-year downturn it suffered between 2000 and 2003 as a result of the technology industry's decline and terrorist attacks in 2001.

Highway contract awards, for instance, rose 23 per cent in March, according to the latest figures from the American Road & Transportation Builders Association. CRH already makes about 36 per cent of its US sales from infrastructure-related construction.

"There is good potential for market growth in the non-residential sector and for us to do bolt-on deals to MMI," said Myles Lee, CRH's finance director.

CRH's American operations grew faster than its European business in 2005 and now account for 51 per cent of operating profits.

Its US products division posted a 23 per cent profit increase, to €308 million last year, compared to a 15 per cent drop, to €176 million, at the same division in Europe.

As a result of the acquisition, CRH will gain three new businesses in the US: MMI's Merchants Metals unit, which makes products for fences; Ivy Steel and Wire, which produces welded wire reinforcements; and Meadow-Burke, which makes construction accessories such as metal brackets used in offices.

CRH said MMI will become the foundation of a fifth product group for its Americas products and distribution division. CRH director John Wittstock yesterday resigned from the board, where he was managing director for European products and distribution, and will assume responsibility for MMI.

Mr Wittstock wants to return to the US for personal reasons.

MMI employs about 2,500 people and generated earnings before interest, tax, depreciation, amortisation and goodwill (Ebitda) of $50 million in 2005 on sales of $721 million, CRH said.

Brokers described the purchase price, at seven times 2005 Ebitda, as "fair".

"The deal should offer significant scope for organic and developmental growth - with synergies the deal is very attractive," said John Sheehan, an analyst at NCB Stockbrokers.

Optimism about CRH's latest acquisition pushed the stock, the biggest non-financial share on the market, up 2.5 per cent, or 72 cent, to €29.35 yesterday. Trading in the company's American Depositary Shares (ADS) began on the New York Stock Exchange on March 31st, after the stock's listing was transferred from the Nasdaq.

CRH expects to complete the deal by the end of this week.