$1.47-Billion Lafarge Bid Rejected : French Parent, Wall St. Skeptical About Unsolicited Offer
Lafarge Corp., one of North America’s biggest producers of cement and building materials, received an unsolicited $1.47-billion cash takeover offer Tuesday, but the company’s French parent said it wouldn’t sell.
The offer came from a group of anonymous private investors and was made through a New York law firm, Adler Hindy Turner & Glasser. Lawrence Orbe, the attorney handling the matter, said his clients were willing to pay $30 a share in cash for Lafarge, which has about 49 million shares outstanding.
Orbe said the investors owned some Lafarge stock but less than 5%, which means that they don’t have to make an extensive disclosure filing about themselves and their intentions to the Securities and Exchange Commission.
He would not provide further details about the clients but said their offer was contingent on obtaining federal antitrust clearance, sufficient financing and no opposition from the board of Lafarge Coppee, the Paris-based cement producer that owns a 58% interest in the company.
Orbe said his clients had met with two major investment banks to talk about financing but wouldn’t identify them.
“For now, the feeling is we want to meet with the parent company to disclose the backgrounds of the principals,” Orbe said. “That’s the most appropriate way.”
It was the second time this month that the group had approached Lafarge Coppee about selling the company. The earlier offer, also for $30 share, was for only the French parent’s controlling interest.
Lafarge Won’t Talk
Lafarge Coppee issued a brief statement through the U.S. subsidiary’s office in Reston, Va., reiterating its rejection of the overture and questioning its authenticity.
The statement called the latest offer “yet another unsolicited letter to Lafarge Coppee from an attorney who purportedly represents an unidentified group of Lafarge Corp. stockholders.”
It concluded: “Lafarge Coppee confirms that it has no interest in selling its holdings in Lafarge Corp. and does not intend to pursue any discussions relating thereto.”
Wall Street reacted skeptically to the offer. In New York Stock Exchange trading, Lafarge stock rose only $1.6225 a share to $19.625, well below the $30 offering price.
Securities analysts knowledgeable about Lafarge also expressed doubts about the offer. Robert G. Maloney, who follows the company for Wood Gundy Ltd. in New York, said, “It doesn’t sound like the way you’d start if you’re serious.”
Maloney said he strongly doubted that the French parent, which has been in the cement business for 100 years, would consider selling its North American operations.
Another analyst, who spoke on condition that he not be quoted by name because of company policy, said Lafarge Coppee’s North American subsidiary has been aggressively cutting costs and shedding unprofitable assets during a downturn in the cyclical construction business. The effort has made Lafarge a more attractive element of the parent’s worldwide operations.
“I don’t think you need to take this offer seriously at all,” this analyst said. “The company has spent this cycle cleaning itself up. Why the heck would they want to sell unless somebody pays through the teeth for it?”
