Mining group Anglo American Plc is to hive off its unwanted Tarmac UK construction materials business into a joint venture with French cement maker Lafarge SA after failing to make an outright sale. Having struggled for more than three years to find a buyer for the unit, which it bought as part of the larger Tarmac group in 2000, Anglo said on Friday it has agreed to merge Tarmac UK with Lafarge's own UK cement, aggregates, concrete and asphalt businesses in a 50:50 joint venture.
"While Anglo American's objective remains to divest its interests in the joint venture over time, this transaction positions us well to maximise value," Chief Executive Cynthia Carroll said in a joint statement with Lafarge. The deal comes as Carroll seeks to slim down the diversified miner and cut its debt through a restructuring which analysts see as being designed to get it fit to fight any new renewed bid attempt by last year's spurned suitor Xstrata Plc.
Asked why Anglo had opted for a joint venture rather than pursuing an outright sale, Carroll said market conditions in the UK were still "very challenging ... a sale of the business would have required waiting for this cycle to recover which could take some time."
Nevertheless there was some disappointment that Anglo had failed to sell the business outright and its shares were down by 2.4 percent by 1245 GMT, despite it reporting stronger than expected earnings. "I don't think the Tarmac joint venture was quite the exit everyone was hoping for," Tom Gidley-Kitchin, an analyst at brokerage Charles Stanley, said. Analysts also said the Tarmac UK-Lafarge combination, which last year would have had sales of 1.8 billion pounds ($2.9 billion) and core earnings of 210 million, could face competition concerns and regulators could force disposals.
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