Hanson Proposes $2.5-Billion Acquisition of Pioneer

Hanson, Britain’s No. 2 building-materials producer, on Sunday said it offered to buy Pioneer International Ltd., the world’s third-largest concrete maker, for $2.5 billion to strengthen its position in the global market.

The combination of Hanson and Pioneer would create one of the world’s leading heavy-building-materials group. It would be the world’s No. 1 in aggregates and No. 2 in ready-mix concrete.

“This acquisition represents a major step forward in our strategy of developing our strong U.K. and U.S. positions and securing attractive investment opportunities in continental Europe and Southeast Asia. Pioneer’s businesses are an excellent fit for us both in geographic and product terms,” said Hanson Chief Executive Andrew Dougal.

Hanson’s bid comes amid a series of mergers that analysts expect will cut the global building-materials industry down to as few as four major companies from about 18.

Pioneer Chief Executive John Schubert said the offer is a “fair reflection of the company’s value and future prospects.” Hanson’s offer values Sydney, Australia-based Pioneer at 39% more than the company’s closing share price Wednesday, when trading of its stock was halted in Sydney.

Pioneer has been seeking international joint ventures, mergers and asset swaps for more than two years to try to boost its stock value, up a mere 0.6% in the last 12 months.

In New York Stock Exchange trading Friday, Hanson’s American depositary receipts closed at $41.31, and Pioneer’s ADRs were unchanged at $2.05.

During the last few years, Hanson has pursued a strategy to become a major building company in the area of aggregates and ready-mix concrete, or heavy materials. Some non-core businesses have been sold and others acquired to strengthen its position in the U.S. and Britain while developing greater geographic diversity.

Pioneer is the No. 1 concrete maker in Texas and Arkansas. The company makes about 30% of its earnings in the U.S. That’s expected to grow as it takes advantage of the U.S. government spending $216 billion on new roads and highways.

The company also has quarrying and concrete units in Britain, Germany, Israel, the Czech Republic, Spain and the Netherlands, which account for a combined 20% of Pioneer’s earnings. Asia accounted for 11% last fiscal year with Australia contributing 37%.

Pioneer operates in 17 countries. It owns 160 quarries, 750 cement plants and is joint partner in two cement plants.