Tarmac attacks AI over failed merger

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The Independent Online
TARMAC HAS launched a scathing attack on Aggregrate Industries over the last-minute collapse of their pounds 1.8bn merger earlier this month, accusing the building materials group of reneging on an agreement over the management structure of the enlarged construction group.

The attack by Sir Neville Simms, the construction giant's chief executive, comes as Tarmac clinches a pounds 125m project under the Government's Private Finance Initiative (PFI) to extend the A55 from Llanfair to Holyhead - the first privately-financed deal to be awarded in Wales.

The projects, won by a consortium including Tarmac, the contractor Laing and the consultant Hyder, is for the construction of 32km of dual carriageway. The consortium will design, build, finance and operate the road under the PFI - the Government scheme aimed at encouraging private firms to invest in public infrastructure projects.

In his first interview since the end of merger talks with AI earlier this month, Sir Neville told The Independent: "Aggregate broke the negotiations by putting a hand grenade in the middle of the room and saying `we are not going to abide by the written agreement'."

According to the agreement, Sir Neville would have become non-executive chairman of the enlarged group, with Peter Tom, AI's chief executive, as chief executive.

The two would also have co-chaired an integration committee to oversee the merger, while membership of the board of the new company and the committee were to be split 50-50 between the two groups.

Sir Neville claimed AI demanded he relinquished his role as co-chair of the committee and wanted the majority of members on the integration committee and on the board.

"This was just ludicrous. In a merger, balance is the vital. Anything else is a takeover and for a takeover you have to pay a premium," Sir Neville said.

He dismissed as "rubbish" claims that the merger had foundered because of a clash of personalities between him and Mr Tom. "It doesn't make sense. I am the chief executive of a group that is bigger than Aggregate and I had already decided to become non-executive chairman," he said.

Sir Neville also rejected as "spurious" AI's argument that his position in the new company would have created a conflict of interest with his proposed role as head of Tarmac's construction division, which was to be spun off from the Tarmac-AI entity.

He said that following the merger's collapse, Tarmac has been in talks with a number of other parties.

The company's share price has been dogged by the presence of the low- margin construction division alongside the building materials unit and Sir Neville has been under pressure from City institutions to break up the group.

In the interview, he did not rule out a split, but said that a merger was still the "preferred option".