Swiss offer £1.8bn for Aggregate Industries as shares soar

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The Independent Online

Aggregate Industries is to become the second major UK building materials group to be swallowed up by a foreign rival in quick succession after the company disclosed yesterday it is poised to accept a £1.8bn offer from the Swiss giant Holcim.

Aggregate Industries is to become the second major UK building materials group to be swallowed up by a foreign rival in quick succession after the company disclosed yesterday it is poised to accept a £1.8bn offer from the Swiss giant Holcim.

The takeover will produce a £29m windfall for Peter Tom, the group'schief executive, and his family, who between them own 20.7 million shares. The company's chairman is the former Tory cabinet minister Norman Fowler, now Lord Fowler.

Mr Tom, 64, who inherited a single quarry in Leicestershire from his father and went on to build it into an international business, is dyslexic and left school with few formal qualifications. He is one of the Midland's best-known businessmen and is also chairman of the Leicester Tigers rugby club.

News of the 138p-a-share approach from Holcim sparked speculation of a counter-bid, either from a rival aggregates group or a private-equity firm, and AI shares ended the day at 140p - a 36 per cent premium to their price a month ago. It also prompted a 4 per cent rise in the share price of Hanson, which would become the UK's only remaining big quoted building materials group if AI succumbs.

Dealers questioned whether competitors such as Anglo-American, CRH, France's Lafarge or indeed Hanson itself could overcome regulatory hurdles while the full price offered by Holcim was thought likely to deter private equity bidders.

Citigroup, Holcim's investment bank adviser, was also in the market, attempting to snap up a 14.9 per cent holding in AI at 140p a share to ward off potential rivals. Holcim's approach follows the £2.3bn takeover of the ready-mixed concrete and aggregates group RMC by Cemex of Mexico.

Together with £600m of cash on AI's books and a 2p dividend, which it would also pay in the event of accepting Holcim's offer, the Swiss bid values AI at £2.4bn - 9.5 times its operating profits, compared with a multiple of 7.9 times, which Cemex is paying for RMC.

AI was created from the 1997 merger of Camas, the name given to the former quarries division of English China Clays, and the rival aggregates supplier Bardon Group, which grew rapidly during the 1990s through a series of takeovers. The group continues to have its headquarters close to the Bardon Hill quarry in Leicestershire where Mr Tom began his career.

The world aggregates industry is being carved up among an increasingly small band of large companies that have grown through acquisition to become vertically integrated players - owning quarries and producing end products such as cement.

Holcim has an £8bn market capitalisation, making it more than four times the size of AI. About 70 per cent of its sales come from cement and its main markets are in developing countries. AI is predominantly an aggregates, concrete, brick and road surfacing group based in the developed markets of the UK and US. It is the UK's fourth-biggest aggregates supplier, after RMC, Hanson and Tarmac, with 10 per cent of the market. AI has also expanded rapidly in America, which now accounts for 40 pert cent of group sales. Last year it completed the $150m (£80m) acquisition of the Sloan Mountain quarry close to Las Vegas.

AI backed out of a takeover last year of the smaller Midlands company Ennstone, which eventually merged with Johnston after a third bidder, Anglo-American, was blocked by the competition authorities.

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