Minorco acquires Tilcon for pounds 330m

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The Independent Online

Deputy City Editor

Minorco took a pounds 330m bet on the depressed UK construction market yesterday when it acquired BTR's Tilcon quarrying subsidiary. The deal doubles Minorco's British construction materials operation and furthers BTR's focus on global manufacturing operations.

Tilcon, the UK's seventh largest producer of aggregates, employs 2,300 workers at 180 sites. Last year it made operating profits of pounds 23.7m from sales of pounds 232m, and is expected to report pounds 29m this time.

Peter Burnell, the Minorco director with responsibility for the group's aggregates activities, said: "We've had our eyes on Tilcon for a long time. It's an excellent fit with the strategy we have for acquiring European aggregates businesses with good reserves. We recognise that in the next 18 months we can't expect much improvement in the construction market."

The deal had been well flagged. The price achieved was almost twice the pounds 180m at which Tilcon was valued in the conglomerate's books. The proceeds will be used to reduce BTR's debts, which the group said in September had risen to 50 per cent of shareholders' funds.

That gearing ratio was before the impact of the proposed purchase of shares in BTR's Australian subsidiary Nylex, which could take it to 100 per cent. Further disposals, including Tilcon's US operations, are expected to follow as BTR continues to shed its non-manufacturing peripheral businesses.

Last year Tilcon produced 14.5 million metric tons of sand, gravel, limestone and hardstone. It was Minorco's second aggregates purchase in a week, having paid DM61.5m (pounds 28m) for a Leipzig-based quarrying operation last Monday.

Tilcon operates largely in the West Midlands, the North and Scotland where in each region it is market leader.

Investment column, page 22