Building materials group Lagan Cement has dropped plans to sell its quarrying division after attracting bids of €400 million and €370 million. Barry O'Halloranreports.
The Belfast-based business put its quarrying and asphalt operations up for sale three months ago, and hired corporate adviser HSBC to oversee the sale.
Based on a valuation at the time, the group, controlled by millionaire brothers Kevin and Michael Lagan, expected bids in the region of €350 million. But following two bidding rounds it has decided to withdraw the business from the market.
It is understood that Lagan was disappointed with the offers it attracted in the second round.
During the first phase it attracted one bid of €400 million-plus, which was understood to have been tabled by venture capital group 3i. The next largest was €250 million. However, the €400 million offer fell through before the second round started after the individual putting it together left 3i.
The best offer Lagan drew in the second round was from an unnamed suitor for €370 million, €20 million ahead of the original valuation. The company reassessed its position when no further offers in the region of €400 million materialised and opted to end the sale process.
Lagan and other players in its sector are poised to benefit from the next stage of the National Development Plan (NDP), which will see billions of State cash spent on a fresh round of infrastructure development.
On that basis, the company's quarrying and asphalt businesses were thought likely to attract bids from international players, and domestic operators such as Readymix and Kilsaran. It is not known if either of these operations tabled a bid for the group.
The quarrying and asphalt businesses essentially provide raw material for the building industry.
Lagan produces about 3.6 million tonnes of stone from its 10 quarries every year. Its output of finished material comes to around 2.2 million tonnes. This element of the entire group contributed about a quarter of Lagan's overall revenues at Lagan Group, whose combined turnover grew 12 per cent in 2006 to €493.91 million.
Group operating profits rose 26 per cent to €51.15 million and pretax profits rose 39 per cent to €44.21 million.
Lagan operates a 500-acre cement plant in Kinnegad, Co Westmeath. Its other businesses include property development, home-building, brick manufacturing and other construction interests. An international division has operations in Europe, the Caribbean, Asia and South America.
The brothers have expanded the business from the quarrying operation their father, Peter Lagan, established in 1960.
They restructured the group in April 2004 into five separate companies focused on specific activities. These include Lagan Holdings, to which the asphalt operations are affiliated, and Lagan Cement, which includes Kinnegad, Mulholland Brothers sand extraction and Roadmix quarrying.
