CRH’s Exit Signals a Continued Exodus from the London Stock Exchange
Building materials giant CRH is set to fully delist from the London Stock Exchange (LSE) on April 20th, marking another blow to the UK’s efforts to retain its position as a leading global equities trading hub. The move follows a shift of the company’s primary listing to Modern York in September 2023.
A Growing Trend of Companies Leaving London
CRH’s decision is part of a wider trend of companies choosing to list, or re-list, on exchanges outside of the UK, particularly in the United States. This exodus is driven by factors such as the pursuit of greater trading liquidity and potentially higher valuations. Other companies that have recently made similar moves include Flutter, BHP and Ashtead.
CRH’s Rationale for Delisting
The Ireland-based company stated that its board determined the delisting was in the “best interests of CRH and its shareholders.” This decision was made after a review that considered the low level of trading activity in its London-listed shares, as well as the costs and administrative burdens associated with maintaining the UK listing. CRH will also seek shareholder approval in May to cancel its preference share listings in London and Dublin.
The Appeal of the US Market
CRH initially moved its primary listing to New York in 2023, citing increased commercial, operational, and acquisition opportunities. Approximately three-quarters of CRH’s earnings are generated in North America, making a US listing strategically advantageous. The company’s aggressive growth strategy in the US, including the $2.1 billion acquisition of Eco Materials Group last year, further supports this focus.
Impact on the London Stock Exchange
The departure of CRH, with a market capitalization of around $67 billion, represents a significant loss for the LSE. Charles Hall, head of research at Peel Hunt, suggested that a secondary listing may not provide substantial value if a company ultimately decides to cancel it, emphasizing the importance of primary trading locations.
Other Companies Shifting Listings
CRH is not alone in reassessing its listing location. Online payments company Wise switched its main listing to New York last year. AstraZeneca also elevated the status of its US listing, potentially costing the UK Treasury up to £200 million annually in stamp duty. Flutter Entertainment moved its primary listing to New York in 2024, citing the US as its “natural home.”
What Does This Mean for the Future of UK Markets?
The ongoing trend of companies leaving the London Stock Exchange raises questions about the future competitiveness of the UK market. While some have suggested focusing on attracting secondary listings, CRH’s departure highlights that these may not be sufficient to retain companies long-term. The bulk of trading activity remains a key factor in determining where companies choose to list.
Did you recognize?
CRH increased its annual revenues by 5% last year to $37.4 billion, with net income rising 8% to $3.8 billion.
Frequently Asked Questions
- Why are companies leaving the London Stock Exchange? Companies are seeking greater trading liquidity, higher valuations, and strategic advantages in markets like the US.
- What is a primary listing? A primary listing is a company’s main stock market listing, where the majority of its shares are traded.
- What is a secondary listing? A secondary listing allows a company to trade its shares on an additional exchange, but it is not the company’s primary listing.
- When will CRH delist from the London Stock Exchange? CRH will delist on Monday, April 20th, with the last trading day being Friday, April 17th.
Pro Tip: Investors should review their portfolios and understand the implications of these listing changes, particularly regarding trading costs and access to shares.
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