Anglo American to sell Tarmac stake to Lafarge for £885 million
Monday 07 July 2014
The UK's biggest cement maker Lafarge Tarmac has been put up for sale, less than two years after it was formed through a joint venture with Anglo American.
A queue of bidders is expected for a major business which is likely to be a major beneficiary of the UK’s economic recovery and plans for major infrastructure projects like HS2.
Lafarge Tarmac, which dates back to the early years of the 20th Century, employs 6,600 people in this country and has 330 sites spread across the UK.
It has been put on the auction block as part of the giant E40 billion merger of Switzerland’s Holcim and France’s Lafarge which will require major sell-offs by both companies in order to get the green light from European competition authorities.
At the same time mining giant Anglo American has agreed to sell its 50 per cent stake in the jointly owned Lafarge Tarmac to the French company for at least £885 million.
That will make it easier for Lafarge to sell the UK business in its entirety for around £1.8 billion.
Anglo American said it would use the cash raised from the sale to pay down its own debt and concentrate on its core mining activities.
Lafarge Tarmac was first mooted as a joint venture in 2011 but only became a reality last year after a near two year investigation by the Competition Commission which demanded various local sell-offs of businesses.
Originally the joint owners had planned to float Lafarge Tarmac on the stock market but this was unlikely to take place until next year at the earliest and has been overtaken by the Swiss-French merger.
Potential bidders for Lafarge Tarmac could include its two major UK rivals Breedon Aggregates and CRH.
But the stronger likelihood is a bid from private equity with a consortium of Blackstone, Cinven and a Canadian pension fund already running its slide rule over Holcim Lafarge assets. Other private equity firms potentially in the frame include Apollo, Carlyle, TPG Capital, BC Partners, CVC and KKR.
Analysts pointed out that any buyer would be unlikely to face competition problems given that the joint venture had been put together so recently with the okay from what was then Competition Commission.
Holcim and Lafarge also announced a number of other disposals today including a cement plant in Austria, Most of Holcim’s French business, Lafarge’s German and Romanian assets and Holcim’s assets in Hungary and Serbia.
Competition authorities in 15 countries as well as the European Commission are examining the deal.
Credit Suisse, HSBC, Morgan Stanley and BNP Paribas are handling the sell-offs.
Anglo American bought Tarmac for £1.2 billion in 1999 while Lafarge built its UK business through a series of takeovers including the bitterly fought £3.1 billion two year battle for Blue Circle which ended in 2001.
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