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Tarmac takeover talk
00:00 05 Aug 1998
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Exclusive by John Leitch
City speculation is rife that Tarmac is in merger talks with a UK aggregates producer.
The aggregates players seen as being most likely to pursue a merger with Tarmac, the UK's leading producer, are RMC, Lafarge, Tilcon or Pioneer. The number two producer ARC is not viewed as being the mystery party because a merger with Tarmac would prompt a reference to the Monopolies and Mergers Commission, as the joint group would hold a dominant 40 per cent market share.
The leading players in the aggregates market are Tarmac (25 per cent), ARC (15), Aggregate Industries (12), Lafarge (10), RMC (9), Tilcon (6) and Pioneer (3).
Tarmac's share price dropped to 95p last week, well below its 1998 high point of 130.5p. Mike Betts, construction analyst with stockbroker Goldman Sachs, estimates Tarmac's shares to have an asset value of 142p, based on the value of comparable UK and US aggregates companies.
A merger with another UK producer could save Tarmac from an unwelcome take-over bid. One analyst said: "With Tarmac's shares at 95p, a predator making a bid of 125p would have a good chance of getting it. Look at the picture with Redland: Lafarge had been waiting for a weakness in Redland's share price and when it fell it recognised that the situation offered a great opportunity."
City speculation is rife that Tarmac is in merger talks with a UK aggregates producer.
The aggregates players seen as being most likely to pursue a merger with Tarmac, the UK's leading producer, are RMC, Lafarge, Tilcon or Pioneer. The number two producer ARC is not viewed as being the mystery party because a merger with Tarmac would prompt a reference to the Monopolies and Mergers Commission, as the joint group would hold a dominant 40 per cent market share.
The leading players in the aggregates market are Tarmac (25 per cent), ARC (15), Aggregate Industries (12), Lafarge (10), RMC (9), Tilcon (6) and Pioneer (3).
Tarmac's share price dropped to 95p last week, well below its 1998 high point of 130.5p. Mike Betts, construction analyst with stockbroker Goldman Sachs, estimates Tarmac's shares to have an asset value of 142p, based on the value of comparable UK and US aggregates companies.
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A merger with another UK producer could save Tarmac from an unwelcome take-over bid. One analyst said: "With Tarmac's shares at 95p, a predator making a bid of 125p would have a good chance of getting it. Look at the picture with Redland: Lafarge had been waiting for a weakness in Redland's share price and when it fell it recognised that the situation offered a great opportunity."
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