Tarmac's Friday deadline - will a sale be announced?

Anglo-American is expected to announce on Friday that rather than put its aggregates division Tarmac on the market right away, it would rather sort out its profitability issues first and then sell Tarmac later – for a much higher price.

If Tarmac was offered for sale this week, it is thought that it would fetch around £3bn.

Currently Tarmac’s operational performance levels are well below those of Aggregate Industries, its leading UK competitor. Tarmac’s is also adrift of Hanson, another major rival.

Cynthia Carroll, Anglo’s new chief executive, has yet to declare her vision on whether she sees Tarmac as being one of the group’s core operations. Anglo is a global minerals operator. There is little synergy between mining for such minerals as platinum and the production of aggregates.

However Anglo’s previous chief executive had vigorously declared that Tarmac was not for sale while he held the reins.

One analyst said: “In Carroll’s shoes, you’d most likely announce on Friday that you’d sit on it, increase profitability, and then sell. As long as you believe you can sort it out, you’d most likely take that route.

“However, the push for global consolidation in aggregates could mean that a rival jumps the gun and pitches in with an offer that is simply too good to refuse. Hanson sold recently for a sum that made people’s eyes water.”

Tarmac’s annual operating profit runs to more than £200m, most of this from its UK operations.

Mike Betts, analyst with JP Morgan Chase, said: “Tarmac’s UK market shares are 21% in aggregates, 28% in asphalt and 24% in ready-mixed concrete. The regulator looks for a maximum figure of 30%, checking out the situation on a regional basis rather than just nationally.”

Tarmac’s major competitors already have sizeable operations in the UK. For example, Holcim has 18% in aggregates while RMC already has 24% of the ready-mixed concrete market.

On this basis, Lafarge would make the most suitable buyer, with an existing UK presence of 9% in aggregates, 6% in asphalt and 10% in ready-mixed concrete. 

CRH, an aggressive buyer in recent years, might be daunted by the scale of the call: its biggest-ever deal runs to £500m, well short of the £3bn it would need to snap up Tarmac.

The Tarmac opportunity could be too good to miss for two major US players, Vulcan and Martin Marietta. Both have seen their rivals become increasingly global and neither has any foothold at all in the UK. Either could make an immediate swoop.