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Wednesday, 19 April, 2000, 11:51 GMT 12:51 UK
Blue Circle rejects raised bid
cement bags
Blue Circle has put up a spirited defence
Britain's biggest cement maker Blue Circle has flatly rejected an increased takeover bid by France's Lafarge.

Lafarge raised its bid to 3.51bn or 450p a share after a lack of support for its previous 420p-a-share offer.

However, the price is still below the 475p that many analysts say will be needed.

It is thought that the British company's board sees 500p as a fair price.

Matt Unsworth, analyst at Commerzbank, said: "This isn't as high as we expected, which suggests it will be a closer-fought thing than we thought."

Other analysts pointed out that a few months ago, shareholders would have accepted 450p, but after the return to favour of "old economy" stocks at the expense of hi-tech companies, and after a spirited defence by the British group's chief executive Rick Haythornthwaite, investors wanted more.

Critical

Lafarge attacked Blue Circle's defence strategy.

Chief executive Bertrand Collomb said: "In its increasingly desperate efforts to preserve its independence, Blue Circle has resorted over the last few weeks to hyperbole regarding its future prospects."

Mr Haythornthwaite said: "Throughout this bid Lafarge has sought to denigrate Blue Circle's prospects in order to buy the company on the cheap.

"Contrary to Lafarge's self-serving protestations, Blue Circle has excellent prospects as an independent company."

Earlier this month, Mr Haythornthwaite announced an 800m cash return to shareholders if they stuck with the current management.

Mr Collombe said after such a payback Blue Circle would be "doomed to remain a second division player with neither the scale nor the resources to compete with the leaders in this global market."

He added: "Blue Circle would not be able to deliver on its promises, and would disappoint its shareholders in the future as it has in the past."

Analysts have now calculated a total sum-of-the-parts value for the firm of 450p-a-share, suggesting Lafarge would have to offer significantly more as a premium for a takeover sweetener.

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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See also:

28 Oct 99 | The Company File
Warning hits Blue Circle shares
11 Apr 00 | Business
Blue Circle's 800m defence
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