UK authorities to look at Lafarge bid for Redland

John Battle, the energy minister, yesterday surprised Lafarge by signalling that the UK competition authorities wanted to launch a full- scale enquiry into the French building group's pounds 1.8bn takeover for British rival Redland. Andrew Yates finds that the move is unlikely to derail the deal.

John Battle yesterday raised concerns about Lafarge's dominance in the ready mix concrete market in the wake of its agreed pounds 1.8bn takeover bid for Redland. Mr Battle has requested that the European Commission allow the UK competition authorities to scrutinise the bid, following a recommendation from the Director General of Fair Trading.

The move came just hours before Lafarge confirmed it had won control of Redland by increasing its stake in the group to more than 50 per cent from just under 30 per cent.

The Office of Fair Trading (OFT) is understood to be concerned about Lafarge's monopoly over the ready mix concrete business in Norwich and Leicester.

Lafarge already has a large presence in the area, having acquired Enemix, a local quarry group, last year in its first move into the UK market. With Redland it will have a stranglehold over part of the Midlands ready mix concrete market.

Analysts believe that Lafarge may be forced to dispose of all or part of the Ennemix business. However Lafarge yesterday insisted that Mr Battle's decision would not scupper its takeover bid. A Lafarge executive said the request was the "usual procedure and raises no difficulties for the public offer for Redland".

The Lafarge bid could lead to temporary overlaps in one or two places in certain markets following the Redland acquisition but Lafarge was ready to talk to Britain's Office of Fair Trading, he added.

One source said that Lafarge was understood to be willing to dispose of Ennemix in order to get the deal past the competition authorities.

Lafarge faces greater competition concerns in France. Post the deal it will control about 18 per cent of the French building materials market. It is also likely to have to restructure Redland's troubled French aggregates business which could lead to redundancies, a move that could lead to problems with the French authorities.

However analysts believe that the EU may just call for small-scale, local disposals.

Mr Battle's move mystified City observers. One analyst said: "I can't for the life of me see why he [Mr Battle] has done this. There are no real competition concerns. Lafarge have hardly anything in the UK."

Lafarge won control of Redland after upping its cash offer from 320p to 345p. The European Commission refused to comment on the bid yesterday.

Outlook, page 23

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