Heidelberg Cement said yesterday it would buy Hanson, the British building materials company, for £8bn, in a deal that will create the second-biggest construction materials business in the world.
The German group agreed to pay £11 a share for Hanson. The takeover of Hanson will help the Germans expand in the key US market. Heidelberg Cement already operates 15 plants across the country under the Lehigh Cement brand.
Hanson has a building products unit and aggregates operation, both in Texas.
The deal, which still requires shareholder approval, represents the sale of the last remaining significant heavy materials company in the UK.
It will also be the end of the road for a company built up into a major multinational in the 1970s and 1980s by founder Lord Hanson and his business partner, Lord White, who were both supporters of then prime minister Margaret Thatcher.
"We are delighted that Hanson has agreed to recommend our proposed offer," said Bernd Scheifele, Heidelberg Cement's chief executive. "It's a defining moment for Heidelberg Cement."
Shares of Hanson powered ahead by 50p to 1107p in London dealing.
The deal will put the combined company behind only France's Lafarge and is indicative of the dealmaking going on in the building sector.
Scheifele said that including debt, the total price for Hanson is £9bn, adding that the deal would be financed with debt, new equity issues and some disposals.
"The acquisition will substantially strengthen (Heidelberg's) business profile by creating one of the world's largest fully integrated heavy building materials companies," said Elisabetta Zorzi of Fitch Ratings.
Hanson will be acquired by Lehigh and the takeover is subject to approval by British and European Union regulators.
Last year, Heidelberg Cement reported around 9bn (about £6.8bn) in sales, while Hanson posted £4.1bn.
Heidelberg Cement employs nearly 46,000 workers in more than 50 countries, while Hanson has 26,000 workers in 14 countries.
Castle Cement is the UK cement arm of Heidelberg Cement, and supplies about a quarter of Britain's demand for cement. Castle, which has been owned by Heidelberg Cement since 1998, has manufacturing plants at Ketton in Rutland; Ribblesdale, in Lancashire; and Padeswood in Flintshire, North Wales.
Yesterday's price represents a premium to other recent deals in the sector, such as Mexican-owned Cemex's £7bn proposed takeover of US- Australian company Rinker.
It is also 29% higher than Hanson's share price prior to Heidelberg Cement announcing on May 2 that it was looking at a possible deal.
Other deals involving UK building materials companies have included the 2005 move by Cemex for RMC, the world's biggest supplier of ready-mix concrete.
Lafarge took over Blue Circle in 2001, while Pilkington - the UK's biggest glass maker - was bought by Japanese firm Nippon Sheet Glass for £2.2bn in June last year.
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