Aug. 7 (Bloomberg) -- Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, agreed to buy the Maxit unit of HeidelbergCement AG for 2.13 billion euros ($2.94 billion) to double its production of industrial mortars.

The purchase makes Saint-Gobain No. 1 in mortars in Germany and Scandinavia, complementing operations in France and southern Europe, the Paris-based company said in a statement today. Mortar sales will increase to 2.24 billion euros from 1 billion euros.

Chief Executive Officer Pierre-Andre de Chalendar, who took over in June, agreed to buy Maxit in an auction as Saint-Gobain sharpens its focus on construction materials. The French company has made 35 purchases this year and sold units including bottle- maker Desjonqueres. HeidelbergCement will use proceeds from the disposal to fund its $16 billion acquisition of Hanson Plc.

``The price is ambitious but Maxit will strengthen Saint- Gobain's presence in northern Europe and offer growth opportunities in emerging markets,'' said Stefan Roehle, an analyst at Independent Research in Frankfurt. ``Mortar is benefiting from a European building boom after years of declines.''

Shares of Saint-Gobain rose 62 cents, or 0.8 percent, to 80.65 euros. The stock has gained 27 percent this year, valuing the company at 30.2 billion euros.

HeidelbergCement advanced 1.82 euros, or 1.8 percent, to 105.2 euros. That pares the Heidelberg-based company's decline this year to 5.2 percent and values it at 12.6 billion euros.

Russia, China

The purchase of Maxit, whose products range from mortar used to lay bricks to wall plaster, outdoor renders, mineral flooring and tile grout, should be completed this year, Saint- Gobain said today.

Based in Breisach, southwest Germany, the unit employs more than 5,000 people, has 103 plants in 30 countries and operates in Europe, Russia and China. The French company's own Weber division has 80 sites in 27 countries.

Saint-Gobain aims to save 30 million euros within three years from combining the operations and said the purchase price is equal to 13 times Maxit's estimated operating profit of 163 million euros for this year.

De Chalendar said on a conference call that the deal ``represents a good price, justified by synergies and growth.''

The acquisition, which will be funded using existing credit lines, is the company's biggest since it bought BPB Plc, the world's biggest maker of gypsum and plasterboard, for about $7 billion in January 2006.

``Industrial mortars combine strong growth in emerging countries and sustained growth in developed ones thanks to improvements in exterior-insulation systems,'' Saint-Gobain said. ``Mortars are inherently local products, for which marketing and technical innovations play an important role.''

Building Blocks, Tiles

Maxit is also the world's largest maker of ``exclay,'' a lightweight product used to make aggregates and building blocks able to withstand high temperatures. The unit also produces granite, marble and porcelain tiles.

Following the purchase Saint-Gobain will control 20 percent of the 10 billion-euro mortar market, the company said in a slide presentation to analysts. Maxit gets 60 percent of its sales in Germany and the Nordic countries, while Weber derives 50 percent from France, Italy and Spain.

Saint-Gobain sold specialty-bottle maker Desjonqueres to buyout firms Cognetas LLP and Sagard Private Equity Partners for 690 million euros in March. The company said today it aims to dispose of the rest of its packaging business ``quickly,'' helping to reduce its level of debt.

S&P Concern

Standard & Poor's Ratings Services placed Saint-Gobain's `BBB+' long-term credit ratings on watch for possible downgrade in response to the announcement of the Maxit purchase, saying there were doubts over the company's ability to restore its funds-to-debt ratio to levels appropriate for that category.

HeidelbergCement Chief Executive Officer Bernd Scheifele hired Goldman Sachs Group Inc. in June to examine options for Maxit, including a share sale and disposal, after agreeing to buy U.K.-based Hanson a month earlier.

A small number of parties expressed an interest in the mortar maker, Brigitte Fickel, a HeidelbergCement spokeswoman, said on July 19. The price was probably boosted by approaches from private-equity funds, Independent Research's Roehle said.

``The price was much higher than estimated, a positive surprise,'' said Karin Brinkmann, a Munich-based analyst at Unicredit with a ``sell'' rating on HeidelbergCement. ``However, the lion's share of the Hanson purchase still has to be financed. They will definitely need to issue bonds or increase capital.''

The purchase of Hanson, the world's largest supplier of sand and gravel for building, is due to close next month.

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net; Anne-Sylvaine Chassany in Paris achassany@bloomberg.net.

Last Updated: August 7, 2007 12:21 EDT