Lafarge is pleased to note the announcement earlier today that the European Commission considers that subject to the divestment of a concrete tile business in Denmark (sales of Euros 16 million and 70 employees) Lafarge's acquisition of Blue Circle is compatible with the rules of the European Union.
Following this announcement, Day 39 of the offer timetable, which is the last day on which Blue Circle can announce material new information, is Wednesday, 12 April, 2000 and the last date on which the offer can become unconditional as to acceptances is Wednesday, 3 May, 2000.
Thus far, Blue Circle's defence has been based almost exclusively on claims and promises about the future whilst ignoring its current problems. Blue Circle should supply detailed information to support these claims, including what is really happening in Greece and evidence as to why the most recently announced cost-saving plan will create shareholder value.
Throughout its defence, Blue Circle has treated the acquisition of Heracles, first announced in June 1999, as a done deal. It originally expected to complete the deal before the end of 1999. Despite negotiating with the vendor two extensions of the timetable for completion, the deal remains unfinished even though Blue Circle continues to claim that completion is expected shortly. Why has the transaction been delayed and why was it necessary for Blue Circle to pay the vendor of Heracles £30 million, which it will forfeit if it cannot complete the transaction ?
Last week, Blue Circle announced a new operational improvement plan. To a large extent, this plan comprises improvements which any major cement group needs to make in order to remain competitive. Furthermore, a number of Blue Circle's assumptions, for example in relation to fuel costs, are unrealistic. Blue Circle claims that its plans will lead to a step change in profitability. This flies in the face of its past experience ; despite a decade of cost cutting in the United Kingdom, Blue Circle's UK profits are just £ 16.7 million higher than they were in 1990. Blue Circle needs to demonstrate why its latest plan, unlike its predecessors, will deliver shareholder value.
Lafarge awaits Blue Circle's response to these questions in its next announcement.
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