Orascom in Tarmac bid rumours

Orascom in Tarmac bid rumours
Published: 17 January 2007

Egyptian conglomerate Orascom is rumoured to have had a £1.5bn offer for Tarmac turned down.

Orascom’s construction division has been making a rapid push into the cement production sector around the world, particularly by snapping up plants in countries seen as volatile by its competitors, such as Algeria and Iraq.

Anglo American (AA) bought Tarmac seven years ago for £1.2bn. Some put its potential current value, based on a similar multiple to that used in the takeover of Aggregate Industries, at slightly more than £2bn.

Despite AA insisting Tarmac was not for sale, this could change in March when new chief executive Cynthia Carroll takes control."For AA to justify staying with Tarmac, it has to become more substantial on the world stage," said one analyst.Orascom Construction Industries began as a contractor, but its search for cement supplies eventually led it to becoming a cement producer itself. "It has a huge competitive advantage. 
 
Its production costs are mid-teens of dollars, compared with European plants that cost two to three times more," the analyst added.