Lafarge in £3.4 billion bid for Blue Circle

LAST month saw further activity in the current trend towards consolidation and globalization of the UK building materials industry, with Lafarge launching a £3.4 billion hostile takeover bid for Blue Circle Industries, a move which would make Lafarge the world's largest cement manufacturer.

The 420p-a-share cash bid was immediately rejected by Blue Circle, who had already rebuffed the French firm's informal offer of 430p a share a few days earlier.

Blue Circle's chief executive, Rick Haythornthwaite, said the offer did not merit discussion and was unworthy of referral to shareolders. Analysts believe Blue Circle's assets are worth around 450-475p a share, and think the Lafarge will have to pay closer to 500p to secure a deal. If successful, however, Lafarge will hold a 46% share of the UK cement market and overtake Holderbank of Switzerland as the number one cement producer in Europe.