The deal comes just hours before Redland was due to produce its final defence document confirming the pounds 800m sale of its 56.5 per cent stake in RBB, its European roof tiles subsidiary, to German family shareholders.
Redland had launched a spirited defence against Lafarge's original 320p a share offer. However it approached Lafarge yesterday in an attempt to to seal a higher offer before it finalised the sale of RBB.
Robert Napier, chief executive of Redland said: "Our aim was to beat the 320p offer. Our discussions showed us that there was more value than that in Redland; 345p in cash in these markets was in the best interests of our shareholders."
Bertrand Collomb, the chairman and chief executive, said yesterday: "I am delighted we have concluded an agreement with the board of Redland. It clears the way for the creation of a world-class company with great potential."
Analysts believe that the raised bid should be high enough to secure the acquisition of Redland, with other building groups unlikely to top it. Mr Napier and most of Redland's board are expected to leave Redland as Lafarge mounts a large-scale shake up of the merged group.
The deal marks the latest move in the overdue consolidation of the building materials industry, which has been dogged by over capacity.