By Dow Jones Business News,
July 07, 2014, 02:35:00 AM EDT
Anglo American Close to Exiting Tarmac Business
LONDON--Mining company Anglo American PLC's 14-year foray into the world of road surfacing is close to ending after it
agreed Monday to sell its 50% share of Lafarge Tarmac Holdings Ltd. to Lafarge, its partner in the building materials
joint venture, for $1.5 billion.
The deal rids Anglo of one of the last legacy businesses that it held from its days as a conglomerate. Under former
chief executive Cynthia Carroll and her successor Mark Cutifani the company has refocused on its core business of mining
commodities such as iron ore, coal and platinum.
In a statement, Anglo said it intends to use the proceeds of the deal to pay down some of its net debt, which stood at
$10.7 billion at the end of last year
Tarmac was acquired by Anglo shortly after it listed in London in 1999, joining a roster of diverse assets that once
included paper mills, property and even financial services.
Under Ms. Carroll, Anglo initially put Tarmac up for sale in 2007 before eventually forming a joint venture with
Lafarge in 2011.
The mooted $50 billion merger of Lafarge with Swiss cement company Holcim, announced in April, has now given Anglo an
opportunity for a complete exit.
Holcim and Lafarge on Monday released a list of operations around the world, including in Europe, that they plan to
sell to assuage antitrust concerns. The two cement giants need to shed assets that generate more than $4 billion in
revenue annually--including the Lafarge Tarmac joint venture.
For Lafarge, taking full control of Lafarge Tarmac should make it easier to find a buyer for the business. It should
also give Lafarge more control over how it negotiates any competition concerns stemming from its Holcim tie-up.
Anglo American said on Monday that the sale of its share of Lafarge Tarmac was conditional on the completion of the
Lafarge agreed to pay a price at the top end of valuations, based on the venture's current earnings potential, said
Sanford C. Bernstein analyst Phil Roseberg.
Mr. Roseberg said it was "unlikely" that the money Lafarge had laid out would be recouped in full through a follow on
sale, suggesting the real value of the deal to the French firm lay in pushing through its merger with Holcim.
"No doubt Anglo had the upper hand in this negotiation," Mr. Roseberg said
Alex MacDonald and Neil Maclucas contributed to this article.
Write to Alexis Flynn at email@example.com
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