Breedon eyes Lafarge/Anglo assets

894 Breedon Aggregates, whose investors include George Soros, can spend  £1 billion pounds ($1.6 billion) on assets that may come to the market as 725 Lafarge and 722 Anglo American pursue a tie-up in crushed rock.

The combination of Anglo's 868 Tarmac operation with Lafarge is expected to prompt £250-£500 million of assets to come onto the market when the Competition Commission rules on its impact, Peter Tom, chairman of the Breedon-on-the- Hill-based company, central England,said by phone.

"We can comfortably spend up to £1 billion on acquisitions," said Tom, the former chief executive of 1707 Aggregate Industries, bought by 680 Holcim for $4.1 billion in 2005. "We do not expect assets of that size to come to market in the short term."

The aggregates industry may see further consolidation as Lafarge and 674 HeidelbergCement consider disposals as a means to regain investment-grade ratings. Bernard Fontana, Holcim's newly appointed chief executive, is reviewing the company's portfolio and said he was open to divestments.

The Commission on 21 February said the planned Lafarge and Anglo venture will reduce the number of UK cement makers to three from four and limit competition. It may prohibit the transaction in full or demand the sale of assets. The companies may have to divest cement and ready-mix concrete operations on a scale similar to the current operations of either company, the Commission said.

Merger and acquisition activity in the building materials industry jumped 23% in 2011 to $27.9 billion, according to data collected by Bloomberg. That's still just 38% of the $73.7 billion in deals announced in 2007. That year featured the industry's two largest deals ever, HeidelbergCement's $18- billion takeover of 1343 Hanson, and Lafarge buying 3056 Orascom's construction business for $15 billion.

The transactions inflated debt just prior to a slump in US and UK housing markets, and lower economic growth due to the European debt crisis. Like Lafarge and HeidelbergCement, 643 Cemex SAB, the largest cement maker in the Americas, was stripped of its investment-grade credit rating.

Lafarge CEO Bruno Lafont said he's aiming to sell at least 1 billion euros of assets this year, and his counterpart Bernd Scheifele at HeidelbergCement in November said he was going to look "more closely at disposals."

"There are not many buyers for these assets," Breedon Chairman Tom said on the plants that Lafarge and Anglo may be required to sell. "We are a natural buyer, and we have the necessary firepower. We are in the fortunate position to be supported by our banks and our shareholders."