Anglo American to Sell Lafarge Tarmac Stake

By Dow Jones Business News, 
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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 Holcim-Lafarge merger.

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 alexis.flynn@wsj.com

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