Anglo to sell stake in Lafarge TarmacComment on this story
Global miner Anglo American said it would sell its 50 percent stake in Lafarge Tarmac to Lafarge for a minimum consideration of 885 million pounds ($1.51 billion) in cash, on a debt and cash free basis.
Lafarge Tarmac was formed as a 50:50 joint venture between Lafarge UK and Anglo American's Tarmac business.
The miner said it expects to use the proceeds to pay down debt.
Anglo American said it was making the announcement at this stage as Lafarge intends to offer the divestment of this joint venture to the European Commission as part of its proposed merger with Holcim Ltd.
Anglo American said the sale would be subject to a number of conditions including the completion of the Lafarge-Holcim merger.
Lafarge and Holcim need to shed around 5 billion euros ($6.81 billion) in assets to help persuade competition regulators to back the proposed merger that was unveiled in April and would create the world's biggest cement maker with $44 billion in annual sales.
Competition regulators in some 15 countries, as well as the European Commission, are expected to take a hard look at the Holcim-Lafarge deal, which brings together the two biggest cement makers globally.
Anglo American said it would work with Lafarge towards finalising the terms of a definitive agreement in the third quarter of 2014.
“The deal is in line with Anglo's stated strategy to consolidate its operations and focus on core divisions,” Citi analysts said in a note to clients.
“Though the deal value is just 4.1 percent of the company's current market capitalisation, we believe it will provide much needed support to Anglo's balance sheet.”
Anglo American shares were down 0.5 percent in early trading on Monday. - Reuters