German cement maker eyes Hanson

Consolidation has been the trend in the construction industry

Heidelberg, the German cement maker, is mulling the possibility of bidding for British rival Hanson.

Heidelbergcement said it was looking at buying the group, founded by businessman Lord Hanson, but said there was no guarantee an offer would follow.

Shares in Hanson soared on becoming a potential bid target, climbing more than 5% in early trade after adding 20% on Thursday.

Hanson is the last UK-owned major heavy building materials firm.

Heidelbergcement said it was "currently reviewing its options with respect to its interest in Hanson, including the possibility of seeking to acquire the company."

"However, there can be no certainty that an acquisition will result or what the terms of such an acquisition may be," Germany's biggest cement maker added.

Shares in Hanson closed 45.5 pence, or 4.44%, higher at 1070.5p on the London market on Friday.

'Industrial logic'

There is a certain industrial logic Ralf Doerper, analyst, WestLB See Hanson's shares here

Analysts attribute the growing interest in the business, which produces crushed rock, sand and gravel, to falling asbestos claimants and a reserve bank of buildings materials estimated to last for 50 years.

"There is a certain industrial logic, as this would lead to the strong vertical integration already tested by rivals," said Ralf Doerper, an analyst at WestLB, who called the potential merger "a strategic fit".

But other market watchers say the deal will depend on Heidelbergcement's willingness to pay for the firm, which trades at a high premium to its rivals.

The British company, which generates about half of group sales in the US, said last month its first-half results could be impacted by the problems in the US housing market and a weak dollar.

Hanson developed a fearsom reputation in the 1980s when it became known as a corporate raider, becoming a tobacco-to-timber conglomerate worth £11bn.

In 1996, the decision was taken to split up the business into four separate companies to focus on heavy buildings materials.

Hanson has operations in Europe, North America, Australia and Asia Pacific.