France’s Lafarge and UK mining company Anglo American have announced they are to combine their tarmac and cement businesses in the UK.
The 50-50 joint venture will see the two companies merge their cement, aggregates, ready-mixed concrete, asphalt and contracting businesses in the UK—currently operating as Tarmac UK and Lafarge Cement UK.
The combined sales of the two businesses in 2010 was £1.8 billion.
The new venture is expected to generate synergies each year of at least £60 million through increased operational efficiencies, improved logistics, the introduction of value-added products across a greater geographic area and other factors.
In a statement, the companies said that the deal would create a leading UK construction materials company with a portfolio of assets drawing on the complementary geographical distribution of operations and assets, the skills of two experienced management teams and a portfolio of well-known brands.
Commenting, Cynthia Carroll, chief executive of Anglo American, said: "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 maximise value."
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, is accretive to Lafarge shareholders and illustrates our strong commitment to the UK market."
The deal is subject to regulatory approvals, until which time both companies will continue to operate independently.
Lafarge Cement UK employs 2,800 people and has five cement plants with a network of 14 depots and terminals. Its aggregates operations comprise 38 quarries, 19 depots and 20 recycling sites. It also has 100 fixed plant sites and six mobile plants under its ready-mixed concrete banner and 19 fixed plant asphalt sites along with three mobile asphalt plants.
Tarmac UK employs approximately 4,500 people. Its cement and lime operations comprise one integrated plant and three depots; aggregates 118 quarries and 40 recycling plants; ready-mixed concrete 180 fixed sites; and asphalt 69 plants.
