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Lafarge bids for Blue Circle
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February 1, 2000: 6:45 a.m. ET
U.K. cement firm rejects $5.5B offer from French rival; more bids may emerge
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LONDON (CNNfn) - France's Lafarge launched a 3.4 billion pound ($5.5 billion) hostile bid Tuesday for U.K. cement maker Blue Circle, though analysts warned that the French company risked flushing out a rival bid.
Blue Circle formally rejected the 420 pence-a-share cash bid as "wholly inadequate". The price is just 2 pence above the level at which Blue Circle closed on Monday, after a gain for the day of more than 20 percent, prompted by Lafarge's announcement that it was considering making a bid for its U.K. rival.
Blue Circle said Monday that suggestions of a bid around 430 pence under-valued the company. Analysts suggested that the French company would have to pitch an offer around 500 pence to secure the company.
London-based Blue Circle (BCI) climbed another 5 percent to 435 pence in morning trade Tuesday. Lafarge (PLG) shares rose almost 4 percent to 93.90 euros.
Blue Circle became a takeover target after issuing a profits warning last October. The company had suffered 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 employs 66,000 staff and recorded sales of more than 10 billion euros ($9.8 billion) last year.
Analysts suggested that Lafarge had mishandled its bid by not approaching the company until Sunday and pitching its offer so low. Rivals such as Switzerland's Holderbank and Mexico's Cemex are also believed to be examining possible bids for Blue Circle.
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.
Meanwhile, Blue Circle is reportedly considering a bid for Texas-based Southdown (SDW: Research, Estimates), the second-largest U.S. cement maker, in an effort to thwart Lafarge's approach. Southdown is valued at about $1.85 billion.
The French glassmaker and building materials company Saint-Gobain (PSGO) on Monday agreed to pay 1.3 billion pounds in cash and assumed debt to acquire U.K. building materials supplier Meyer International. The French company's shares climbed 2.7 percent while Meyer's surged 17 percent. 
--from staff and wire reports
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