Tarmac bows to City pressure and demerges
Wednesday 03 February 1999
Sir Neville Simms, the Tarmac chief executive, said the break-up of the 96-year-old group would help to develop the two businesses and revive the company's flagging share price. Tarmac stock has underperformed most of its rivals because the low-margin construction business dampened the prospects of the highly-profitable building materials operations.
"Having two different businesses in the same group is confusing. They were just not valued satisfactorily," Sir Neville said. The shares closed up 4.25p at 117p yesterday, as the market speculated that the building materials part of the group could be targeted by Tarmac's arch-rival Aggregate Industries.
Talks over a pounds 1.8bn merger between the two companies collapsed at the end of last year after a bitter row over the management structure of the group. Aggregate Industries (AI) was not available for comment yesterday, but Sir Neville said that a takeover was "impossible" because Tarmac building materials was bigger than AI.
Under yesterday's plans, Tarmac would spilt its two main divisions into two separately quoted groups in the second half of the year, through a distribution of shares to existing investors.
The building materials group, which last year had sales of pounds 1.2bn and profits of pounds 142m, will be the larger of the two. City analysts said the company was expected to have a market value of around pounds 880m - 80 per cent of the group's existing capitalisation.
Tarmac building materials has 10,000 employees and is one of the leading players in the UK market and also has a substantial operation in the US and Central Europe.
The construction and civil engineering group, which posted a pounds 29m profit on turnover of pounds 1.6bn, would be valued at around pounds 220m.
The unit, which has 13,000 employees, has moved away from traditional contracting to focus on higher-margin work such as privately financed projects.
Sir Neville said the demerger was not expected to create job losses among the group's 23,000 employees.
The company said that the management structure of the two groups had not been decided.
- 1 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 2 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 3 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
- 4 News agency criticised for describing Amal Clooney as 'actor's wife' in coverage of human rights trial
- 5 David De Gea to Real Madrid: Real finally get their man with £29m bid for Manchester United goalkeeper
Rules on 5p plastic bags likely to lead to arguments at the check-out
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
News agency criticised for describing Amal Clooney as 'actor's wife' in coverage of human rights trial
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...