Lafarge SA the world's biggest cement maker, increased an offer to buy out its North American unit by 9.3 per cent to $3.3-billion (U.S.) as it seeks a bigger slice of the fast-growing U.S. building materials market.
The Paris-based company bid $82 a share for the 47 per cent of Lafarge North America Inc. it doesn't own after a $75 offer won acceptances for less than 1 per cent of the stock.
Analysts were split on whether the sweetened approach will succeed.
Chief executive officer Bruno Lafont, in charge since January, is pursuing one of the biggest-ever U.S. minority buyouts to boost earnings and speed decisions. Demand for cement in the world's biggest economy is surging after construction spending last year rose 8.9 per cent to a record $1.12-trillion.
"At this price shareholders of Lafarge North America should be satisfied," said Rafic El Haddad, an analyst at Ixis Securities in Paris with an "add" rating on Lafarge.
Tobias Woerner of Man Securities disagreed.
"A higher offer is still required," said the London-based analyst, who also recommends investors buy Lafarge stock.
Lafarge North America said in a statement on PR Newswire yesterday that a special committee of its board will consider the offer and decide what action to take "in due course."
Shares of Lafarge, which plans to finance the purchase with a loan from advisers J.P. Morgan Chase & Co. and BNP Paribas SA, slipped 25 cents, or 0.3 per cent, to $117 ( €96.1.) The stock has gained 26 per cent so far this year, valuing the company at €16.9-billion.
Lafarge North America, based in Herndon, Va., rose 79 cents to $85.15 at 2:48 p.m. in New York Stock Exchange composite trading. That's $3 higher than the latest bid, suggesting investors anticipate a further improvement. The stock has added 55 per cent this year for a value of $6.4-billion.
The North American unit's origins date to 1956, when Lafarge built a cement plant near Vancouver. The operation was expanded through acquisitions, with shares of the new company listed on the New York, Montreal and Toronto stock exchanges in 1983.
Lafarge's latest approach is 28 per cent higher than the U.S. stock's close prior to an initial bid on Feb. 6. That offer was dismissed by the unit's board as "inadequate" and accepted by holders of fewer than 42,000 of 71.4 million shares outstanding.
Fidelity Investments, the subsidiary's largest minority investor with a 7.7-per-cent stake, didn't immediately respond to a request for comment left with London-based spokesman Richard Miles.
Should it succeed, the buyout will be one of the top half-dozen in the U.S. since 1999. Paris-based insurer Axa SA's purchase of 40 per cent of Axa Financial Inc. for about $9.5-billion in 2000 is the biggest to date, Bloomberg data show.
Even at the new bid price, the Lafarge deal would boost earnings by about 6 per cent a share, company spokeswoman Stephanie Tessier said. Ixis's Mr. Haddad said that the sweetened offer, which runs until April, 28, is likely to succeed.
"The main concern was that Lafarge might have abandoned the buyout, but they didn't really have a choice because it's part of Lafont's strategy," the analyst said, adding that the French company can afford the extra $300-million cost.
Man's Woerner said previous minority buyouts have ended up 10-to-15-per-cent higher than the initial offer price and Lafarge may therefore have to increase its bid further.