Ashland Paving and Construction (APAC), with headquarters in Atlanta, Georgia, is willing to sell the unit; if discussions lead to a formal agreement, the move will mark CRH's single biggest acquisition to date.

The deal has the potential to be transformational for aggregates firm CRH, a fact recognised by investors last week as its stock rose almost 5% on the news. By Thursday afternoon its shares were trading at 25.15, still up almost 5% from the closing price of 24.11 last Friday week.

In the year to March 2006 APAC recorded sales of $2.8bn and earnings before interest, taxation, depreciation and amortisation of $200m. By comparison, CRH recently reported a 13% rise in sales last year to 14.4bn, while net income rose 15% to 998m.

CRH generates about 3.5bn of its sales from its US materials business.

Citigroup, which is rating CRH as a 'buy' with a price target of 29.60, said last week the APAC deal would have a whole range of benefits for CRH, giving it more exposure to the southern states; leading a to a more efficient balance sheet; yielding potential synergies; increasing benefits from good pricing trends in US aggregates; and reducing CRH's exposure to US housing while increasing its access to US infrastructure.

The latter would be particularly useful at a time when higher interest rates are making homes dearer. In one indicator that homebuyers may be feeling the pinch, house sales in the San Francisco Bay Area fell in May for the fourteenth month in a row, posting a 20% decrease on the same period on 2005. It's the lowest figure since 2001.

US home start data for May was stronger than expected, recovering from a 13-month low. New home construction numbers rose 5% to an annual rate of 1.957m, according to US Department of Commerce figures released last week.

The number of building permits issued, which indicates the likely number of future starts, fell 2.1% to 1.932m, however . . . the lowest figure since November 2003.

US highway construction spending is forecast to rise by 5.9% in 2006 and by 6.2% in 2007, supported by a new $223bn US federal highway spending programme and improved state finances, according to the Portland Cement Association.

There has been little negative comment on CRH's proposed APAC acquisition. Davy Stockbrokers analyst Barry Dixon said last week that the takeover would be a "good deal" for CRH, if it can do it at the right price. If it can, he said, there is plenty of scope for improved profitability "given the relatively poor margins currently being generated by APAC", which currently has operating margins of 4% compared to CRH's 10.4%.

"We estimate that even at current operating performance, APAC could be accretive to CRH's earnings on a full-year basis, " Dixon said.

"Assuming similar levels of profitability as CRH America's materials business implies the deal could add 10 to 15 cents to earnings per share on a full-year basis."

The price remains the question mark, although CRH has proved fairly adept in the past at hammering out good deals.

John Mattimoe, an analyst at Merrion Stockbrokers, said the purchase price will depend on a number of factors, including the growth outlook for highway spending in APAC's key operational states, the quality of reserves and the business, and how much potential exists for subsequent acquisition development in APAC's areas.

Mattimoe estimates the purchase price could be about $1.4bn, while a higher multiple "could be justified if there is potential to expand APAC's Ebitda very strongly." A multiple of nine times earnings would imply a consideration of $1.9bn, he said. "If APAC can be secured at a sensible value, we would regard the deal positively and would reinforce our buy recommendation on CRH."

That comment was echoed by Citigroup analysts who agreed the deal is "likely to be well received as long as it is bought at a reasonable acquisition multiple". Jeffries and Co analyst Laurence Alexander said a fair price would be between $1.3bn and $1.4bn.

There remain obvious risks for investors on CRH's overall performance. Any downturn in the US economy would have an impact on CRH's share price, as would any marked increase in oil prices or slowdown in the European economy.

Still, CRH is certainly worth a punt. Even if the APAC talks come to nothing, CRH undoubtedly has other targets in its sights.