Lafarge and Anglo American seek asset buyers

Lafarge and Anglo American seek asset buyers
30 June 2011

Lafarge and Anglo American have approached potential bidders for some of their UK cement and quarrying assets, as the two groups look to pre-empt regulatory action over their bid to create the UK’s largest construction materials company.

The companies, which in February announced a potential joint venture with expected combined sales of GBP1.8bn (US$2.9bn), distributed a memorandum of information earlier this week to other building material producers, inviting them to bid in the sale.

The disposal menu contains five bundles of different assets spread across the UK with a combined value of around GBP500m, according to sources familiar with the operation.

Lafarge and Anglo, which operates as Tarmac in the UK, had been expected to make disposals, after The Office of Fair Trading, the UK competition watchdog, launched an investigation into the proposed tie-up in May.

Among the assets up for sale is Lafarge’s Hope cement works in Derbyshire. The plant has a cement capacity of 1.2Mta and is thought to be worth close to GBP200m.

In addition to the cement works, the companies have invited bids on four packages of assets, made up of ready-mix concrete, quarrying and road surfacing businesses in the south-east, East Anglia, Wales and Scotland.

The disposal process could face difficulties, however, as many potential buyers are restricted by competition issues and high debts.

Lafarge’s closest rival, Holcim, is seen as a potential suitor for the Hope plant, as the Swiss group has no UK cement assets and has to import the product from mainland Europe or buy from rivals.

Other possible suitors could include Latin American building materials companies, which have been involved in a number of acquisitions from European competitors and are less constrained by the debt problems of many of their European counterparts.

Both Lafarge and Anglo said they would continue to trade independently until regulatory approval was granted. Published under Cement News