Blue Circle confident of thwarting bid

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The Independent Online

Blue Circle Industries, the cement group, believes it is close to fighting off the £3.65bn bid from French group, Lafarge, with estimates at the weekend suggesting it has the backing of 45 per cent of shareholders' votes. The bid is due to close on Wednesday.

A source close to Blue Circle said: "We've probably got 45 per cent. This is really, really tight but I think we're going to win. We're been working at the bottom end of the share register for weeks [those with smaller holdings]. In their arrogance, they [Lafarge] have not approached these people and they're now out of time."

In a market where "cash is king" and cement production is an unfashionable sector, most analysts have been stunned by the level of public and behind-the-scenes support for rejecting the offer among Blue Circle's institutional shareholders.

After Lafarge grabbed 20 per cent of Blue Circle on 19 April, and its financial advisers, Dresdner Kleinwort Benson, picked up a further 9.6 per cent, most analysts had written off the group's chances of staying independent.

But Lafarge has created bad feeling among Blue Circle shareholders by pitching its offer at 450p per share. This was considered the minimum it might get away with. The bid has also suffered because the institutions appear to have decided to use it to deliver a strong signal that they will not accept "cheeky" bids for Old Economy stocks. Analysts have said that Lafarge needed to bid at least 465p to ensure success. In effect, its offer is worth just 439p, as it will not be paying Blue Circle's final dividend.

Blue Circle's defence gathered speed on Wednesday, when Schroder Investment Management, a 5.5 per cent BCI shareholder, took the unusual step of publicly declaring the offer inadequate. Since then Standard Life, Foreign & Colonial and Cazenove have publicly supported BCI. Privately, it is understood that Morgan Stanley and Prudential have also backed the cement maker's view that 450p a share does not reflect the company's underlying value or its future growth potential.

Institutions with about 20 per cent are thought to be backing the British group. Blue Circle is also thought to be counting on its retail investors, who have about 10 per cent of the company, as well as tracker funds that hold some 8 per cent. They are also claiming the 4 per cent of shareholders who cannot be traced. The predator needs over 50 per cent acceptances to succeed. A Lafarge spokesman yesterday that their soundings of shareholders made them confident of victory.

Blue Circle shares closed up 2.75p on Friday, at 430.5p.

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