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Monday, 22 May, 2000, 06:54 GMT 07:54 UK
Blue Circle in merger talks
Blue Circle cement bags
UK cement manufacturer Blue Circle says it has had initial merger talks with the second-biggest American cement maker, Southdown.

The talks come barely three weeks after Blue Circle fought off a 3.6bn ($5.4bn) hostile takeover bid by French building materials group Lafarge.

Blue Circle chief executive
Rick Haythornthwaite: "Opportunities"

Blue Circle chief executive Rick Haythornthwaite said: "We are always looking at opportunities around the world to expand our cement business.

"It is much too early to say whether Southdown offers an attractive opportunity for Blue Circle and is in the best interests of our shareholders."

The two companies had been discussing a merger before Lafarge launched its bid in February.

Southdown has said it is keeping all options open, including a merger or sale of the company.

The American group is said to be looking for an offer of at least 2bn ($3bn) for a sale.

Britain's biggest cement maker, Blue Circle escaped Lafarge's clutches after the French group failed to win over enough Blue Circle shareholders.

But Lafarge could still play a role in any deal between Blue Circle and Southdown, as it holds 29.9% of the UK group's shares.

A Blue Circle-Southdown merger might require consent from 75% of Blue Circle shareholders.

Scuppered bid

Blue Circle successfully defended itself against Lafarge's bid by promising an 800m share buyback as well as plans to refocus its business.

Mr Haythornthwaite said the rejection of Lafarge sent "a very clear message to the market that these sorts of industries are not for sale on the cheap."

Lafarge chairman and chief executive Bertrand Collomb said he was disappointed but that the company was determined to grow by acquisition.

"Lafarge remains committed in its strategy to expand by acquisition as and when suitable opportunities are available and where such acquisitions can be executed in a way which creates value for Lafarge."

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See also:

04 May 00 | Business
Bid for Blue Circle fails
28 Oct 99 | The Company File
Warning hits Blue Circle shares
11 Apr 00 | Business
Blue Circle's 800m defence
19 Apr 00 | Business
Blue Circle rejects raised bid
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