January 25, 2005
Holcim comes to terms with British construction group in takeover bid
GENEVA
Holcim Ltd., the world’s second-largest cement maker, reports it has reached agreement with Aggregate Industries PLC on a cash offer of about 1.8 billion pounds ($3.4 billion U.S.) for the British construction group.
Holcim will also spend about $800 million (U.S.) on acquisitions through a new strategic alliance with Gujarat Ambuja Cements, India’s third-largest cement maker.
Holcim is offering ordinary shareholders in Aggregate 138 pence ($2.58 U.S.) per share, plus a dividend of two pence (four cents) per share “if the offer becomes or is declared unconditional in all respects,” Holcim said.
Aggregate chief executive Peter Tom said the offer “delivers significant value” for shareholders. The company’s directors intend to unanimously recommend it to shareholders, Holcim said.
The offer represents a premium of 23 per cent over Aggregate’s closing price on Jan. 11, the day before the companies said they were in talks, and 42 per cent above the average closing price over the three months ending Jan. 11, Holcim said.
Holcim, which operates in more than 70 countries including Canada, currently focuses heavily on cement and its most profitable operations are in emerging markets. Aggregate, a maker of building supplies, asphalt and ready-mixed concrete, operates 142 quarries in Britain and the United States with more than 4.4 billion tonnes of reserves.
“The combination with Aggregate Industries streng-thens the position of Holcim as an integrated supplier of building materials,” said chief executive Markus Akermann.
Analysts have said an Aggregate-Holcim deal will give Holcim a foothold in the British market, where it currently does not have a presence. It also gives Holcim access to Aggregate’s market in the U.S., where the British company generates about half its earnings.
“Entry into the attractive U.K. market is part of our strategy of being present in all key markets,” Akermann said.
Holcim said the transaction should generate annual savings of about 100 million Swiss francs ($84 million U.S.) by 2007.
The acquisition will further consolidate the global cement industry, following a $5.8 billion (U.S.) bid by Mexico-based Cemex SA De CV for Britain’s RMC Group PLC.
Deal pending
That deal, approved by European competition authorities in December but still pending before U.S. authorities, would relegate Holcim to third place in terms of size. France’s Lafarge SA is the world’s largest cement maker.
Under the terms of Holcim’s deal with Gujarat Ambuja, the two companies have agreed to swap expertise and co-operate in trading activities, Holcim said.
The Swiss company will buy a majority stake in Gujarat Ambuja subsidiary Ambuja Cement India Ltd., which will in turn make an offer to buy a majority shareholding in Associated Cement Companies Ltd., India’s second-largest ce- ment maker.
Holcim said it has been evaluating ways of entering the Indian market for some time and plans to use India as a base for its technology and research and development projects. It expects the acquisitions to be completed by April.
In Canada, Holcim’s subsidiary Montreal-based St. Lawrence Cement Inc. serves about 9,000 customers in Canada and the U.S.
The Associated Press
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