Cement giant Lafarge buys Orascom

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The world's biggest cement maker Lafarge is to buy Egyptian firm Orascom Cement for 8.8bn euros ($12.9bn; £6.32bn).

Shares in Lafarge rose 13% to 121.66 euros on the news, as analysts see the deal boosting Lafarge's presence in high-growth emerging markets.

Lafarge will take on 1.4bn euros of debt as part of the deal, which will result in annual savings of 150m euros.

Orascom Cement is a unit of Orascom Construction Industries (OCI).

One of OCI's shareholders, its chief executive Nassef Sawiris, will take a 11.4% stake in Lafarge as part of the deal.

Foothold in Mediterranean

The deal will give Lafarge a foothold in the Mediterranean Basin and Middle Eastern markets, the firm said.

"The acquisition of a leading Egyptian group is a decisive opportunity to accelerate our profitable growth strategy in cement in emerging markets," Lafarge chairman and chief executive Bruno Lafont said.

The deal means that 65% of Lafarge's earnings will come from emerging markets in 2010 against 45% in 2007, Mr Lafont said.

Lafarge will do further deals in high-growth emerging markets in the future, he added.

For Orascom Construction Industries, the deal allows it to concentrate on its other businesses.

"This transaction allows us to focus all of our resources on developing our construction, infrastructure and natural gas operations, which we believe currently have unprecedented growth opportunities," Mr Sawiris said.

Mortgage hit?

Separately, the world's biggest building materials group Saint Gobain said it did not expect conditions in the US construction sector to improve before 2009.

"The environment in the US in the construction sector is not going to improve in 2008. We do not expect a pick up before 2009," said its chief executive Pierre Andre de Chalendar.

Some analysts had expected the crisis in the sub-prime mortgage sector, which has hit the US housing market, to hit the construction sector globally.

But the impact of the sub-prime crisis on France was limited, Saint Gobain's boss said.

"In France, loans are traditionally based on the borrower's revenues, rather than on the value of the assets he is borrowing for. The danger of a financing bubble is much more limited," Mr de Chalendar told French daily Les Echos.