Not for release, publication or distribution in or into the United States, Canada, Australia or Japan
. Lafarge announces a cash Offer, subject to the pre-condition set out below, to acquire all of the ordinary share capital of Blue Circle.
. The Offer, which will be made by Dresdner Kleinwort Benson and BNP Paribas on behalf of a wholly-owned subsidiary of Lafarge, values each Blue Circle Share at 420p and the existing issued share capital of Blue Circle at approximately £3.4 billion.
. The Offer represents:
- a premium of 1.4 per cent. over the closing middle market price of 414.0p per Blue Circle Share on 31 January 2000, the last business day prior to the announcement of the Offer
- a premium of 33.6 per cent. over the closing middle market price of 314.25p per Blue Circle Share on 27 January 2000, the day before there was significant speculation in the market concerning a possible bid for Blue Circle
- a multiple of 18.8 times earnings after exceptional items of 22.4p per Blue Circle Share for the year ended 31 December 1998 and a multiple of 14.5 times earnings before exceptional items of 28.9p for that year
. The Offer is subject to the pre-condition that funding for the Offer is arranged on terms satisfactory to Lafarge by no later than the close of business on 22 February 2000.
. The combination of Lafarge and Blue Circle is a natural partnership and will create the world's largest producer of cement. Lafarge has the management strength and global presence to extract value from the combination.
. Blue Circle sold cement assets in the 1980s and invested heavily in heating and bathroom products. This investment created no value and Blue Circle has now entirely reversed this strategy. Lafarge considers that Blue Circle:
- has pursued, in the last 2 years, an aggressive acquisition strategy in order to try to recover the ground it has lost in the world cement market
- suffers from inherent volatility in profits because of its exposure to a small number of developing economies. Despite expenditure on acquisitions in Asia totalling over £700 million in 1998 and 1999, these businesses are likely to report an operating loss for 1999
- because it is essentially a one product company, will have difficulty addressing the geographical imbalance in its asset portfolio without the risk of being forced into making further cement acquisitions at high prices
. These difficulties are reflected in Blue Circle's financial performance:
- operating margins fell in 1998 relative to 1997 and will have been lower again in 1999
- earnings per share before exceptional items, on the basis of a consensus of leading analysts' forecasts, will be lower in 1999 than in 1997 and are forecast to be lower in both 1999 and 2000 than in 1998
. As a consequence, Blue Circle's share price, at 314.25p on 27 January 2000, was approximately 12 per cent. lower than on 2 January 1997.
Commenting on the Offer, Bertrand Collomb, Chairman and Chief Executive Officer of Lafarge, said today:
"We strongly believe that this offer is in the interests of the shareholders of both companies and that Blue Circle will not deliver value for its shareholders to match our offer. The combination of Lafarge and Blue Circle is a natural partnership in world cement. For Lafarge, this transaction represents a further major step in our development. It will enhance our operations in North America, the UK, sub-Saharan Africa, the Philippines and Egypt as well as providing us with new cement and ready mix concrete opportunities in Malaysia, Chile and prospectively Greece. The offer demonstrates our determination to continue to provide world leadership in building materials."
Kleinwort Benson Limited ("Dresdner Kleinwort Benson"), which is regulated by The Securities and Futures Authority Limited, is acting for Lafarge and the Offeror and no one else in connection with the Offer and will not be responsible to anyone other than Lafarge and the Offeror for providing the protections afforded to customers of Dresdner Kleinwort Benson or for giving advice in relation to the Offer.
BNP UK Corporate Finance, a division of BNP London Branch which is a branch of Banque Nationale de Paris S.A., and Paribas, the London branch of Paribas S.A., (together "BNP Paribas") which are regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for Lafarge and the Offeror and no one else in connection with the Offer and will not be responsible to anyone other than Lafarge and the Offeror for providing the protections afforded to customers of BNP Paribas or for giving advice in relation to the Offer.
Dresdner Kleinwort Benson and BNP Paribas have approved this document solely for the purposes of Section 57 of the Financial Services Act 1986.
A press conference will be held at 9.30 a.m. Paris time and a presentation to Paris based analysts will be held at 10.45 a.m. Paris time in each case at the offices of Lafarge, 61 rue des Belles Feuilles, Paris.
A press conference will be held at 3.00 p.m. London time and a presentation to London based analysts will be held at 4.30 p.m. London time in each case at the offices of Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2.