Lafarge Group Measures Efficiencies In Tender Offer For North American Unit

Late in February, Lafarge Group began a tender offer for shares representing the 46.8 percent of Herndon, Va.-based Lafarge North America that it did

CP STAFF

Late in February, Lafarge Group began a tender offer for shares representing the 46.8 percent of Herndon, Va.-based Lafarge North America that it did not hold. Lafarge NA’s board was expected to review the proposal and make a recommendation to its stockholders in due course.

Lafarge Group offered $75 for each Lafarge NA share, representing a 16.7 percent premium over an early February closing stock price and a 31 percent premium over the average closing price since November. Based on the 35.3 million minority-owned shares and on outstanding options, the offer represents a total transaction value of $3 billion. As part of the transaction, Lafarge also offered to purchase all outstanding shares of Lafarge Canada, a subsidiary of Lafarge NA.

The offer represents a unique opportunity for Lafarge North America shareholders to realize the value of their shares at a significant premium to Lafarge North America’s current and recent stock price, notes Lafarge Group’s Bruno Lafont, who became chief executive officer in January. This transaction will enable us to pursue business and growth opportunities in North America even more effectively. It makes operational sense, because it will streamline and accelerate decision-making, free of the complexity of operating through a partially owned, publicly traded subsidiary. And it makes financial sense, because it will enable us to improve the use of free cash flow at the group level.

The offer hinged on the tender of a majority of the shares not held by Lafarge and its affiliates and the ownership by Lafarge of at least 90 percent of the outstanding shares. Any common shares not acquired in the tender offer are expected to be acquired in a subsequent merger at the same price as the tender offer. Since 1983, Lafarge NA has traded on the New York Stock Exchange. In 2001, Lafarge Group set up what for U.S. investors is known as an American depository receipt facility, whereby its shares are also traded on NYSE. One ADR represents four shares of Lafarge Group stock as traded on the company’s principal exchange, Euronext Paris Bourse.

The takeover of Lafarge NA mirrors a similar transaction that Lafarge Group’s Swiss rival, Holcim Ltd., effected in the mid-1990s, when it acquired the remaining, NYSE-traded shares of its U.S. business, Holnam Inc. Lafarge Group established a North American foothold in the 1960s, acquiring a Vancouver cement plant from which a major franchise evolved.