Tarmac falls to £1.2bn Anglo American bid

The consolidation of the heavy-building materials sector gathered pace yesterday as Anglo American, the South African mining group, gobbled up Tarmac at its third attempt.

The consolidation of the heavy-building materials sector gathered pace yesterday as Anglo American, the South African mining group, gobbled up Tarmac at its third attempt.

The move represents a swift about-face by Tarmac executives, who are understood to have come under pressure from institutional shareholders to strike a deal. After last week describing 600p a share as too low, Tarmac agreed late on Thursday to accept a bid at 585p, which it said "fairly reflects the value and prospects of Tarmac".

Julian Ogilvie Thompson, the chairman and chief executive of Anglo American, said: "The combination of our two businesses will create a leading UK aggregates company, with ... considerable scope for synergies and associated cost savings."

The offer, which values Tarmac at £1.2bn, represents a 64 per cent premium to the shares' closing price on 25 October, the day before Tarmac disclosed it was in talks. Sir John Banham, Tarmac's chairman, said Tarmac would benefit from access to the greater resources offered by the larger group. It will be merged with Anglo American's Tilcon.

Analysts estimate the combined group will be the country's largest supplier of aggregates, and second largest maker of ready-mixed concrete. The offer was made in cash, with a loan note alternative.

Anglo American pitched its first offer at 535p a share, before raising it to 550p last week. Tarmac then walked away from the deal, with chief executive Roy Harrison saying 600p was "not a number I would recognise - our shareholders expect more".

Anglo American said its final offer had been endorsed by Tarmac's directors and an unnamed institutional shareholder, representing 17.5 per cent of the existing share base.Tarmac rose 15.5p to 569.5p; Anglo American fell 7p to 3,323p.