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2020 / 2021 Edition

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Tarmac and Lafarge UK operations to be combined

Lafarge and Anglo American in joint venture to create a leading UK construction materials company

LAFARGE SA and Anglo American plc have signed a binding agreement to combine their cement, aggregates, ready-mixed concrete and asphalt and contracting businesses in the UK, comprising Lafarge Cement UK, Lafarge Aggregates and Concrete UK and Tarmac Quarry Materials.

The transaction will form a 50:50 joint venture and will create a leading UK construction materials company with a portfolio of high-quality assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced teams and a portfolio of well-known and innovative brands.

The 2010 combined sales of the two businesses amount to £1.8 billion with combined EBITDA of £210 million. The combination is expected to deliver substantial recurring synergies of at least £60 million per annum through increased operational efficiencies, improved logistics, and the introduction of value-added products across a wider geographic reach.

Commenting on the joint venture, Bruno Lafont, chairman and chief executive of Lafarge, said: ‘This new leading construction materials company, built on the strengths and proud histories of two great teams, will create more value to customers, with an enhanced and larger offer of products and services. For Lafarge, this deal is cash neutral, accretive to Lafarge’s shareholders and illustrates our strong commitment to the UK market.’

Cynthia Carroll, chief executive of Anglo American, added: ‘We are excited to be bringing together two-high quality and complementary UK businesses to create a compelling new industry proposition through which we expect to unlock significant value. While Anglo American’s objective remains to divest its interests in the joint venture over time, this transaction positions us well to maximize value.’

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

Completion of the transaction is conditional upon regulatory approvals, which could take several months. Both Lafarge UK and Tarmac UK operations will continue to operate independently until obtaining such approvals.

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