Lafarge in talks with Etex to sell plaster assets
PARIS (Reuters) - French cement maker Lafarge SA (LAFP.PA) has entered exclusive talks to sell most of its plaster activities in Europe and South America to Belgium's Etex Group for 850 million euros ($1.2 billion).
The deal would mean Lafarge, the world's largest cement maker, will exceed its target of selling at least 750 million euros worth of assets as part of a plan to cut its debt by 2 billion euros.
Lafarge, which took on debt to finance the purchase of Egypt's Orascom Cement for 8.8 billion euros in 2007, also plans to fund its debt reduction by cutting the dividend payment and other cash outlays.
Lafarge shares were up 1.4 percent at 40.20 euros in morning trade, the top gainers in the French CAC 40 index of blue chip stocks, having lost 15 percent since the beginning of the year.
Lafarge Chief Executive Bruno Lafont said on Thursday he expected to complete the transaction before year-end.
"There are a certain number of important steps which include consultation with staff and the competition authorities and all this should lead us to conclude before the end of the year," he told Reuters in an interview.
The transaction gives the combined units being sold an enterprise value of 1 billion euros. Lafarge will retain a 20 percent stake in the new entity created to control the activities which it could sell to Etex within five years.
"The plan represents an immediate source of cash for the group, even while allowing it to keep a stake in the new entity and to thus have a stake in its future success," Lafont said in a statement.
The plaster division, the smallest at the company, generated about 9 percent of the group's sales last year, with revenue of 1.4 billion euros and current operating profit of 58 million.
Including U.S. operations, whose sale was not announced, its value had been estimated at between 1 and 2 billion euros.
Lafont declined to comment on the future of the group's plaster business in North America, Asia and Australia.
($1 = 0.702 Euros)
(Editing by Hans-Juergen Peters and David Holmes)
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