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Cement Deals Solidify Foundation for Building Boom: Real M&A 2014-04-04 18:13:25.944 GMT
(For a Real M&A column news alert: {SALT REALMNA <GO>}.)
By Tara Lachapelle, Thomas Black and Brendan Case April 4 (Bloomberg) -- For signs that construction is on the mend, look no further than the cement industry. Money being spent to acquire suppliers of building materials worldwide is surging to the highest level since at least May 2008, according to data compiled by Bloomberg. After $22 billion of deals in the past 12 months, Holcim Ltd. and Lafarge SA -- the world’s two biggest cement makers with a combined market value of more than $50 billion -- are in advanced merger talks. “What we’re seeing is a recognition by these companies that the bottom is in and that the recovery is happening,” Todd Vencil, a Richmond, Virginia-based analyst at Sterne Agee Group Inc., said in a phone interview. “Companies are feeling confident enough about that to have the buyers and sellers able to come together now.” A tie-up of Holcim and Lafarge would allow the cement producers to cut costs as some of the industry’s kilns run at a loss after the global recession eroded demand for building materials. The merger will likely spur even more deals as the companies are forced to sell off assets to appease regulators, according to Cantor Fitzgerald LP. Cement makers are preparing themselves to profit as construction spending accelerates. In January, Martin Marietta Materials Inc. agreed to buy Texas Industries Inc. for about $2.7 billion in the industry’s biggest North American deal in five years. “People want to get the chess pieces in order where they want to be through this next cycle,” Trey Grooms, a Little Rock, Arkansas-based analyst at Stephens Inc., said in a phone interview. “They don’t want to wait until the peak like we saw last time.”
For Related News and Information: Holcim in Talks About $40 Billion Cement Merger With Lafarge NSN N3IK6G6TTDSH <GO> Holcim Predicts Improved 2014 as Sales Miss on Currency Swings NSN N1LCG26S972J <GO> Martin Marietta to Buy Texas Industries for $2.7 Billio NSN N04CY66VDKHZ <GO> Cement deal news: TNI CEM MNA <GO> Real M&A columns: NI REALMNA <GO> Top deal stories: TOP<GO>
--With assistance from Whitney Kisling in New York.
To contact the reporters on this story: Tara Lachapelle in New York at +1-212-617-8911 or tlachapelle@bloomberg.net; Thomas Black in Dallas at +1-214-954-9458 or tblack@bloomberg.net; Brendan Case in Mexico City at +52-55-5242-9284 or bcase4@bloomberg.net To contact the editors responsible for this story: Beth Williams at +1-212-617-2307 or bewilliams@bloomberg.net; Ed Dufner at +1-214-954-9453 or edufner@bloomberg.net Ed Dufner