Anglo American, the FTSE 100-listed mining group, and the French cement giant Lafarge are to merge their British construction materials businesses to form a new venture with £1.8bn in annual sales.
The 50-50 venture will bring together Lafarge UK, which employs 2,800 people, and Anglo's unwanted Tarmac UK unit, which employs 4,500 people and entered the Anglo fold when the miner bought the larger Tarmac group at the turn of the century.
Anglo has spent three years searching for a buyer for Tarmac, but failed in the face of a sharp downturn in the construction market.
The mining giant's chief executive, Cynthia Carroll, said domestic market conditions remained challenging and "a sale of the business would have required waiting for this cycle to recover, which could take some time".
She said: "While Anglo American's objective remains to divest its interests in the joint venture over time, this transaction positions us well to maximise value."
Lafarge chief executive Bruno Lafont said the deal was cash neutral for the French group.
The venture – news of which was met by disappointment among those pinning their hopes on an outright sale of Tarmac – will have its own board of directors, led by an independent chairman and executive management teams drawn from the two parent companies.
The business will boast extensive operations. Lafarge UK has five cement plants with a network of 14 depots and terminals, while Tarmac's cement and lime operations encompass one plant with three depots. In aggregates, Lafarge has 38 quarries with 19 depots and 20 recycling sites while Tarmac has more than 100 quarries and 40 recycling plants. The two also operate in other markets, including asphalt.
Analysts warned that regulators may seek disposals. "We believe that the competition authorities may insist upon some disposals as the two groups own a number of assets in the same areas and approval may take some time," analysts at Sanford Bernstein said.