RMC may enter pounds 1bn bid battle for Scancem

RMC, the building materials group, is considering entering a pounds 1bn- plus bid battle for Scancem, the Scandinavian rival that owns Castle Cement, the UK's second-biggest cement producer.

Industry sources said RMC's interest in the Swedish group would trigger a fierce bid war with several European rivals, including CRH, the Irish building materials giant, and France's Lafarge, Europe's largest maker of construction products.

The companies declined to comment last night but insiders said that the three groups are set to table an indicative offer for Scancem before tomorrow's deadline. City analysts said the initial bids would be pitched at around pounds 1bn, in line with the group's market value on the Stockholm stock exchange.

Scancem, which is jointly owned by Skansa, the Swedish construction giant, and the Norwegian conglomerate Aker, is a prized asset in Europe's fiercely- competitive building materials market.

The Stockholm-based group is one of Europe's leading cement producers with a dominant market share in the Nordic countries and operations across the globe. Last year it had sales of more than 17.56bn Swedish Kronas (pounds 1.35bn) and profits of over pounds 150m.

Skansa and Aker put the company on sale at the end of last year after European Union anti-trust authorities called for a break-up of the group to reduce its share of the Scandinavian cement market.

The two owners,which control over 90 per cent of the voting rights in Scancem, have still not decided whether to sell the group as a whole or to dispose of its components separately.

The second option would increase the likelihood of a bid by RMC and CRH for Castle Cement, one of Scancem's crown jewels. The UK company commands a 25 per cent slice of Britain's cement market, the second largest after Blue Circle's 45 per cent but ahead of Rugby's 20 per cent. Castle is currently undergoing a pounds 50m modernisation programme to upgrade its plants and reduce costs.

Analysts said a victory by RMC could dramatically change the structure of the UK market as it would create a "one-stop materials shop" offering anything from aggregates, used in roadbuilding and houses, to cement, used in heavy civil engineering projects.