Big cement buyout: Lafarge to acquire Blue Circle

LONDON/PARIS, JAN. 8. French building materials group Lafarge said on Monday that it had agreed to buy the 77.4 per cent it did not already own of British rival Blue Circle Industries plc (BCI) for 3.8 billion euros ($3.61 billion), heralding the creation of the world's largest cement maker.

Lafarge's agreed offer of 495 pence per Blue Circle share clinches a pursuit it started last May when the U.K. firm fended off a hostile bid of 450 pence. Lafarge shares firmed 4.5 per cent in morning trade to 95.75 euros.

Lafarge said it would fund the acquisition, approved by BCI's board, with a one billion euro capital increase and planned to sell assets worth 1.5 billion euros over the next 18 months. It added it expected its debt to rise by 2.8 billion euros, but said the takeover should boost its earnings per share before goodwill by at least 10 per cent by 2002.

The acquisition will boost Lafarge's annual cement production capacity by around 40 per cent to 150 million tonnes and strengthen its presence in emerging markets. The company said it expected annual operational and cost synergies of around 100 million euros within two years.

Lafarge made its first entry into the U.K. a little over three years ago, when it made a 1.8 billion pound takeover of aggregates producer Redland. In the past few months, it has strengthened its position in Europe with a 10 per cent stake on Cimpor, a Portuguese cement maker, and had made no secret of its desire to try again for BCI.

It said on Monday that the total investment, including the 22.6 per cent of BCI it had already bought and an exceptional dividend for BCI shareholders, was the same as the 7.4 billion euro offer it made in 2000. And Lafarge will be acquiring a stronger company than the one it initially bid for.

Since Blue Circle rebuffed Lafarge's initial offer, BCI has made strides in delivering promised made by Chief Executive Mr. Rick Haythornthwaite in the defence against the initial bid. BCI has remained on track with promised cost savings, and returned a total of 800 million pounds to shareholders via a share buy-back and special dividend.

Lafarge expects the deal to be concluded by summer 2001, pending approval from competition authorities.

- Reuters

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