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Lafarge eyes Blue Circle
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January 31, 2000: 7:05 a.m. ET
French building materials firm could bid $5.9B for U.K. rival; may have to up offer
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LONDON (CNNfn) - French building materials firm Lafarge said Monday it was mulling a cash bid for Britain's Blue Circle Industries reportedly worth 3.6 billion pounds ($5.9 billion), a deal which would make it the world's largest cement producer.
Shares in Blue Circle (BCI), which has been seen as a takeover target since a profits warning last October, soared 21.5 percent to 417 pence in London. The stock rose 9.8 percent Friday on expectation of a deal pitched around 430 pence, 25 percent above last week's close.
Blue Circle suffered last year from a slump in business in Asia, a market where Lafarge has said it wants to increase its exposure. Analysts have said the U.K. company would make a good strategic fit with Lafarge, which had sales of more than 10 billion euros ($9.8 billion) last year.
Blue Circle confirmed it had received an approach, but said the price being discussed undervalued the company.
Analysts echoed that view. "If [Lafarge] is trying to seek some agreement, I can't see that being at any price below 500 pence a share," Kevin Cammack at Merrill Lynch told Reuters.
Lafarge (PLG) shares lost 4 percent to reach 91.55 euros Monday. The stock has dipped 12 percent since the start of the year, cutting its market value to 10.6 billion euros.
Lafarge's acquisition of building-products maker Redland in 1997 sparked a run of consolidation in the U.K. building materials sector. RMC last year bought cement maker Rugby for 900 million pounds while South Africa's Anglo-American acquired Tarmac for 1.2 billion pounds. 
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