Blue Circle upbeat on Asian ops

By THIS IS MONEY
Updated: 18:00 EST, 27 March 2000

Cement producer Blue Circle said on 28 March it expected annual operating profits of at least £89.5m from its Asian operations by 2002, around a 10-fold increase on current levels.

The estimate, the latest stage in its defence against a hostile takeover bid from French rival Lafarge SA did not take account of performance improvement plans, details of which would be published in coming days, it said.

Chief executive Rick Haythornthwaite told Reuters it wanted to highlight the integration benefits of recent Asian acquisitions as it approached Day 39 in the takeover process, the last day on which a company can post defence documents.

'We have pursued a deliberate strategy of investing in Asia and are now in an extremely strong position to benefit from the upturn in the market,' said Haythornthwaite, adding it had a leading position and low supply cost base in both Malaysia and the Philippines.

'Lafarge's bid is an attempt to capture this growth on the cheap for the benefit of their own shareholders.'

Lafarge has offered 420 pence per share.

At 1100 Blue Circle's share price was marginally higher at 413 pence, after closing at 412- 3/4 pence on Monday for a price/earnings ratio of 24.4 and valuing the company at around 3.5 billion pounds.

Britain's Takeover Panel said on March 14 it would extend its Day 39 deadline for Blue Circle until two days after the European Commission rules on the Lafarge bid.

An EC spokesman said on Tuesday it had extended its self-imposed deadline to rule on the Lafarge bid to April 12 from April 3 after the companies offered concessions to address competition concerns. He gave no details.

Britain has a 60-day takeover timetable, which begins when a company formally launches an offer for another by publishing and posting an offer document to its intended target's shareholders.

Under the initial timetable for Blue Circle/Lafarge, Day 39 would have been March 20.

In a previous document posted to its shareholders, Blue Circle highlighted the 'exciting potential' of its property portfolio last Thursday, saying it had a present value to the firm of £546m, or 67 pence per share.

However, it conceded that value could 'only be released over time through the development process', and the current open market value was put at 227 million pounds.

Blue Circle said the nugget was its mainly brownfield - previously developed - sites near the River Thames in Kent, bordering east London.

This area and type of land were both recently pinpointed by the government as being ripe to bear much of the housebuilding explosion planned for the next 20 years in south-east England.

For its part, Lafarge said the £227m figure was disappointingly low in the range of analysts' estimates it was using to value Blue Circle's property.

Analysts said realising the £546m present value would take the best part of 25 years and would be dependent on Government decisions and external market forces. © Reuters