Last charge against Lafarge

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Blue Circle Industries, the cement maker, will this week tour its institutional shareholders in a final effort to repel the hostile advances of Lafarge, the French aggregates group.

Rick Haythornthwaite, Blue Circle's chief executive, is understood to be confident that leading investors will reject Lafarge's revised 450p-a-share offer, which values the company at £3.5bn. The increased bid, announced on Wednesday, was at the bottom end of expectations, which had ranged as high as 500p a share. Analysts suggest that while a bid of 475p would have given Lafarge victory, its offer of 450p leaves the result in doubt.

In concert with its advisers, Dresdner Kleinwort Benson, Lafarge has so far picked up 29.9 per cent of Blue Circle shares, which is the maximum holding currently allowed. The sellers included institutions like Newton and Royal & Sun Alliance, as well as arbitrageurs who only bought their shares following Lafarge's original 420p-a-share bid in January and were eager to bank their profits.

However, the remaining shareholders, which include Schroders, Mercury Asset Management and Prudential, may decide to put their faith in the strategic plans highlighted in Blue Circle's defence document. The verdict of shareholders will depend on their view of the forecasts put forward by Mr Haythornthwaite, figures on which Lafarge has poured scorn.

Mr Haythornthwaite said: "We're looking forward to talking shareholders through this again, and we're very confident we can win."

Maintaining Blue Circle's independence is something of a personal crusade for Mr Haythornthwaite, who only took the helm nine months ago. He was promptly forced to issue a profits warning which wiped more than 40 per cent off the company's shares. Blue Circle's performance has been undermined by high cement prices and the economic decline in regions where much of its business is located. Part of Mr Heythornthwaite's defence rests on the continued recovery in Asia, particularly in Malaysia and the Philippines.

The building materials industry has already seen significant consolidation, notably Lafarge's £1.8bn acquisition two years ago of Redland.

It was reported yesterday that Mr Haythornthwaite could take home £1m for nine months' work if Lafarge's bid were to succeed.

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