Lafarge’s Gypsum Unit Said to Draw Bids From Carlyle, Bain, Belgium’s Etex
Stock Chart for Lafarge SA (LG)
Buyout firms Carlyle Group, Bain Capital LLC and Advent International Corp. submitted initial offers for Lafarge SA (LG)’s European gypsum business, said four people with knowledge of the matter.
Other bidders include Belgian building-material company Etex Group (ETEVP) SA, TPG Capital, based in Fort Worth, Texas, and Cinven Ltd., a London-based private equity firm, said the people, who asked not to be identified because the talks are private. Lafarge expects a sale will value the assets at as much as 1 billion euros ($1.4 billion), two of the people said.
Chief Executive Officer Bruno Lafont, who ran the unit from 1998 to 2003, has pledged to step up asset sales and cut spending to trim debt by at least 2 billion euros this year as the Paris-based company tries to regain an investment grade credit rating. It was cut to junk by Standard & Poor’s in March. Lafarge is selling the U.S., European and Australian operations of the unit separately and the European assets are the biggest part, the people said.
Claire Mathieu, a spokeswoman for Lafarge, declined to comment. Spokespeople at Carlyle, TPG, Bain Capital, Advent, Cinven and Etex declined to comment.
On May 12, Lafarge agreed to sell some U.S. cement assets with an enterprise value of $760 million to Colombia’s Cementos Argos SA as part of a plan to sell at least 750 million euros of assets this year. The divestment target doesn’t take into account any potential “major” operation, Lafont has said.
The gypsum unit, the world’s third-largest supplier of the mineral used in wallboard, saw a 53 percent increase in current operating profit to 58 million euros last year as sales climbed 6 percent to 1.44 billion euros. That’s equal to 9 percent of Lafarge’s total sales.
Revenue at the gypsum business, which employs almost 8,000 people in 30 countries, rose 9 percent in the first quarter 2011 and operating income climbed 80 percent to 18 million euros as construction markets improved in some parts of Europe and the company continued to cut costs.
In Europe, Lafarge’s largest competitors in the wallboard market are France’s Cie. de Saint-Gobain SA and Germany’s Knauf Gips KG. In the U.S., Lafarge faces rivals such as National Gypsum, Saint-Gobain and Chicago-based USG Corp. (USG) and Delcor Inc.’s National Gypsum.
In China, South Korea, Malaysia, Thailand, Indonesia, Vietnam and India, Lafarge’s gypsum activities are in a joint- venture with Australia’s Boral Ltd. (BLD) Lafarge also owns wallboard plants in Australia, eastern Europe, North African countries and South Africa, and jointly controls gypsum operations with Belgium’s Etex Group SA in some Latin American countries.
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