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Tuesday, 11 April, 2000, 09:06 GMT 10:06 UK
Blue Circle's 800m defence
blue circle
Jobs at cement plants may be at risk
Blue Circle Industries says it will pay back 800m to shareholders as part of its defence against a hostile takeover bid from French rival Lafarge.

Lafarge has offered 420p a share for Blue Circle, Britain's biggest cement maker.

But Blue Circle says that its offer is worth an extra 1 a share to each shareholder.

" The beneficial effect of buying in shares, the exciting prospects of the group plus the opportunity to release capital equivalent to 1 per share offer significantly greater value to shareholders now than Lafarge's bid," the company said in a statement.

"The critical point is that our plans are not jam tomorrow as Lafarge claim, it is cash today," chief executive Rick Haythornthwaite said.

Under the plan, Blue Circle would return 400m through the purchase of shares immediately after Lafarge's offer lapses, and would return a further 400m later in the year, probably through money generated by the sale of some of its foreign assets.

Blue Circle shares traded up 2p at 431.5p following the statement.

Asian crisis

Blue Circle became vulnerable to takeover after its profits were hit by the Asian crisis, which hurt its cement business in Malaysia.

The company's shares fell to a low of 269p after it issued a profits warning last year.

Blue Circle says that problems in Malaysia are now easing and its expects 20% growth in that market in 2000.

Meanwhile, the European Commission said it had given its approval for the sale of Blue Circle to Lafarge on condition of the sale of its Danish tiling operations.

Lafarge says that Blue Circle has failed to manage properly its overseas units, including recent acquisitions in Greece.

"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," the company said in a statement.

A global giant

Lafarge is active in 65 countries and employs 71,000 people worldwide, with a turnover of $10bn.

The firm, with a history going back more than 160 years, wants to create a global giant in each of its five product groups, cement, aggregates and concrete, roofing, gypsum and speciality products.

It has already moved into the UK market by purchasing building materials group Redland.

Blue Circle has also been hit by the consolidation in the building materials industry, with UK rival cement maker Rugby was acquired by one of its biggest clients, RMC.

It operates eight cement plants in the UK and owns companies in North America, Africa, and Asia.

The offer closes on 3 May.

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28 Oct 99 | The Company File
Warning hits Blue Circle shares
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