CMC to strengthen precast position with Foley Products acquisition

The opportunity  

The acquisitions of Foley and CP &P allow CMC to expand into the growing precast concrete market and strengthen its position in the construction industry. CMC already holds a significant share of the US concrete market, rendering precast a natural strategic move. After closing on the acquisitions, CMC will run 35 facilities in 14 states, making it the third-largest precast producer in the country and a leading supplier in the Mid-Atlantic and Southeast. 

As a top-performing precast company, Foley was attractive to CMC. The precast company boasts strong margins and strong cash generation. It also has a track record improving acquired businesses, boosting margins by more than 10 percentage points. CMC plans to apply Foley’s best practices across its growing precast platform to drive additional value. 

CMC said it plans to combine Foley and CP&P, resulting in annual cost savings of $25-30 million. It said best-practice synergies will lower manufacturing costs, improve efficiency, and streamline support functions, driving the company’s projected cost savings. The company said it also sees an upside from cross-selling and expanding product offerings across regions. 

Financials 

CMC expects the two acquisitions to generate strong cash flow, which will help the company pay down its debt. When the deals are complete, CMC’s debt level will be about 2.7 times its earnings. The company plans to use the new cash flow to bring that below 2.0 times within 18 months. It expects the precast business to generate enough steady cash to strengthen CMC’s balance sheet and reduce financial risk. 

The purchase price of Foley represents a multiple of 10.3x Foley Product’s 2025 EBITDA forecast.