Lafarge partners with Tarmac

18 February 2011

Tarmac UK, a subsidiary of mining company Anglo American, is to partner with French contractor Lafarge to create a UK-based cement, aggregates, ready-mixed concrete and asphalt joint venture.

The 50:50 partnership would see Lafarge Cement UK and Lafarge Aggregates & Concrete UK pool their resources with Tarmac, which owns 118 quarries, 69 asphalt plants and 180 ready-mix concrete sites.

The businesses recorded combined sales of £ 1,8 billion (€ 2,2 billion) in 2010, and Lafarge said the tie-up would generate £ 60 million (€ 72 million) in cost savings annually.

Anglo American has been looking for a buyer for Tarmac since 2007, when it put the business up for sale but later withdrew the tender due to fears over pricing.

Since then, it has divested parts of the business to Vinci and Holcim in 2010 and 2008 respectively.

Indeed, in spite of the business agreement with Lafarge, group chief executive Cynthia Carroll said that full divestment of the UK business remained the company's long-term goal.

"While Anglo American's objective remains to divest its interests in the joint venture over time, this transaction positions us well to maximise value," Ms Carroll said.

Chairman and chief executive of Lafarge, Bruno Lafont, said the complementary portfolios would position the partnered businesses to benefit from an economic recovery.

Mr Lafont said the deal was cash neutral for the company and illustrated its strong commitment to the UK market.

The joint venture will operate with its own board of directors led by an independent chairman and executive management teams drawn from both businesses.

News of the partnership came as Larfarge revealed robust full-year 2010 results and forecast cement demand in its markets to grow up to +6% in 2011.

Lafarge said group sales grew +2% last year to € 16,2 billion, while net income increased +12% year-on-year to € 827 million.

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