Anglo's Tarmac deal with Lafarge likely to attract OFT scrutiny
19 February 2011
Mining group Anglo American plc's consent to a merger of Tarmac UK with the UK business of cement maker Lafarge in a £3-billion deal is likely lead to an inquiry from competition regulators, according to analysts.
Anglo had bought Tarmac UK as part of the larger Tarmac group in 2000.
The 50:50 joint venture would create a cement, aggregates, concrete and asphalt business generating £1.8billion in revenues with a workforce of 7,300.
The UK competition regulator, the Office of Fair Trading, is meanwhile, conducting investigations into the aggregates sector in the UK over concerns that the domination of the five leading players, including Tarmac and French company Lafarge, was causing "high barriers to entry" and making taxpayers overpay for construction materials.
Anglo has been looking to sell Tarmac since 2007 and, according to analysts, the deal is likely to be the first step towards the miner's complete exit from Tarmac through a sale or IPO of the new business. The combined UK assets of the company stand at £3billion.
According to Anglo chief executive Cynthia Carroll, the time was not right for the full disposal of Tarmac. She added that the market was close to an all-time low and this was in the best interests of shareholders.