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Communiqué de presse Lafarge Lafarge press release Powered By Docstoc
					                                                                                              02/01/2000

              Not for release, publication or distribution in or into the United States,
                                     Canada, Australia or Japan




LAFARGE S.A. : CASH OFFER FOR BLUE CIRCLE INDUSTRIES PLC

. Lafarge announces a cash Offer, subject to the pre-condition set out below, to acquire all of the
ordinary share capital of Blue Circle.

. The Offer, which will be made by Dresdner Kleinwort Benson and BNP Paribas on behalf of a wholly-
owned subsidiary of Lafarge, values each Blue Circle Share at 420p and the existing issued share
capital of Blue Circle at approximately £3.4 billion.

. The Offer represents:

- a premium of 1.4 per cent. over the closing middle market price of 414.0p per Blue Circle Share on
31 January 2000, the last business day prior to the announcement of the Offer

- a premium of 33.6 per cent. over the closing middle market price of 314.25p per Blue Circle Share on
27 January 2000, the day before there was significant speculation in the market concerning a possible
bid for Blue Circle

- a multiple of 18.8 times earnings after exceptional items of 22.4p per Blue Circle Share for the year
ended 31 December 1998 and a multiple of 14.5 times earnings before exceptional items of 28.9p for
that year

. The Offer is subject to the pre-condition that funding for the Offer is arranged on terms satisfactory to
Lafarge by no later than the close of business on 22 February 2000.

. The combination of Lafarge and Blue Circle is a natural partnership and will create the world's largest
producer of cement. Lafarge has the management strength and global presence to extract value from
the combination.

. Blue Circle sold cement assets in the 1980s and invested heavily in heating and bathroom products.
This investment created no value and Blue Circle has now entirely reversed this strategy. Lafarge
considers that Blue Circle:

- has pursued, in the last 2 years, an aggressive acquisition strategy in order to try to recover the
ground it has lost in the world cement market

- suffers from inherent volatility in profits because of its exposure to a small number of developing
economies. Despite expenditure on acquisitions in Asia totalling over £700 million in 1998 and 1999,
these businesses are likely to report an operating loss for 1999

- because it is essentially a one product company, will have difficulty addressing the geographical
imbalance in its asset portfolio without the risk of being forced into making further cement acquisitions
at high prices

. These difficulties are reflected in Blue Circle's financial performance:

- operating margins fell in 1998 relative to 1997 and will have been lower again in 1999

- earnings per share before exceptional items, on the basis of a consensus of leading analysts'
forecasts, will be lower in 1999 than in 1997 and are forecast to be lower in both 1999 and 2000 than
in 1998
                                                                                             02/01/2000


. As a consequence, Blue Circle's share price, at 314.25p on 27 January 2000, was approximately 12
per cent. lower than on 2 January 1997.

Commenting on the Offer, Bertrand Collomb, Chairman and Chief Executive Officer of Lafarge, said
today:

"We strongly believe that this offer is in the interests of the shareholders of both companies and that
Blue Circle will not deliver value for its shareholders to match our offer. The combination of Lafarge
and Blue Circle is a natural partnership in world cement. For Lafarge, this transaction represents a
further major step in our development. It will enhance our operations in North America, the UK, sub-
Saharan Africa, the Philippines and Egypt as well as providing us with new cement and ready mix
concrete opportunities in Malaysia, Chile and prospectively Greece. The offer demonstrates our
determination to continue to provide world leadership in building materials."

Enquiries:

Lafarge                                              + 331 4434 1111
Denis Berthu                                         0207 831 3113
Denis Boulet
Dresdner Kleinwort Benson                            0207 623 8000
Kieran Murphy
Rosalind Hedley-Miller
Jonathan Flory                                       + 331 4470 8500
BNP Paribas                                          + 331 4014 4546
Thierry Varene
Ludovic de Montille
Keith Allen                                          0207 548 9548

Financial Dynamics                                   0207 831 3113
Steve Jacobs
Scott Fulton

Kleinwort Benson Limited ("Dresdner Kleinwort Benson"), which is regulated by The Securities and
Futures Authority Limited, is acting for Lafarge and the Offeror and no one else in connection with the
Offer and will not be responsible to anyone other than Lafarge and the Offeror for providing the
protections afforded to customers of Dresdner Kleinwort Benson or for giving advice in relation to the
Offer.

BNP UK Corporate Finance, a division of BNP London Branch which is a branch of Banque Nationale
de Paris S.A., and Paribas, the London branch of Paribas S.A., (together "BNP Paribas") which are
regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for
Lafarge and the Offeror and no one else in connection with the Offer and will not be responsible to
anyone other than Lafarge and the Offeror for providing the protections afforded to customers of BNP
Paribas or for giving advice in relation to the Offer.

Dresdner Kleinwort Benson and BNP Paribas have approved this document solely for the purposes of
Section 57 of the Financial Services Act 1986.

A press conference will be held at 9.30 a.m. Paris time and a presentation to Paris based analysts will
be held at 10.45 a.m. Paris time in each case at the offices of Lafarge, 61 rue des Belles Feuilles,
Paris.

A press conference will be held at 3.00 p.m. London time and a presentation to London based
analysts will be held at 4.30 p.m. London time in each case at the offices of Financial Dynamics,
                                                                                              02/01/2000

Holborn Gate, 26 Southampton Buildings, London WC2.

Page 15 of 16




1 February 2000

Not for release, publication or distribution in or into the United States, Canada, Australia or
Japan

Lafarge S.A.

Cash Offer for Blue Circle Industries PLC

1. Introduction

Lafarge announces a cash Offer, subject to the pre-condition set out below, to acquire all of the
ordinary share capital of Blue Circle.

2. The Offer

The Offer, which will be made by Dresdner Kleinwort Benson and BNP Paribas on behalf of a wholly-
owned subsidiary of Lafarge, will be subject to the pre-condition, conditions and further terms set out
below and in Appendix I as well as in the Offer documentation and will be made on the following basis:

for each Blue Circle Share 420p in cash

The Offer values the existing issued ordinary share capital of Blue Circle at approximately
£3.4 billion.

The Offer represents:

. a premium of 1.4 per cent. over the closing middle market price of 414.0p per Blue Circle Share on
31 January 2000, the last business day prior to the announcement of the Offer

. a premium of 33.6 per cent. over the closing middle market price of 314.25p per Blue Circle Share on
27 January 2000, the day before there was significant speculation in the market concerning a possible
bid for Blue Circle

. a multiple of 18.8 times earnings after exceptional items of 22.4p per Blue Circle Share for the year
ended 31 December 1998 and a multiple of 14.5 times earnings before exceptional items of 28.9p for
that year

Blue Circle Shares will be acquired under the Offer free from all liens, equities, charges,
encumbrances and other interests and together with all rights now or hereafter attaching to them.

3. Information on Blue Circle

Blue Circle is an international heavy building materials company. It is focused on the production of
cement in developed and developing markets. Its products also include aggregates and ready mixed
                                                                                                02/01/2000

concrete and related products for the construction industry. Blue Circle's principal markets are the UK,
USA, Canada, Malaysia, the Philippines, Chile and Egypt and it has recently contracted to acquire a
Greek cement group.

In the year ended 31 December 1998 (as restated for FRS 12 and FRS 15), turnover of the Blue Circle
Group was £2,021 million (1997 £1,939 million). Profit before tax and exceptional items was £324
million (1997 £342 million) and profit before tax but after exceptional items was £271 million (1997
£246 million). Earnings per share before exceptional items were 28.9p (1997 29.0p) and earnings per
share after exceptional items were 22.4p (1997 17.0p). Shareholders' funds as at 31 December 1998
were £1,290 million.

In the six months ended 30 June 1999, turnover of the Blue Circle Group was £1,022 million (1998
£938 million). Profit before tax and exceptional items was £110 million (1998 £135 million) and profit
before tax but after exceptional items was £170 million (1998 £135 million). Earnings per share before
exceptional items were 10.1p (1998 12.0p) and earnings per share after exceptional items were 17.8p
(1998 12.0p).

4. Information on Lafarge

Lafarge is the world's largest producer of building materials. It is a leading world supplier in each of its
core business areas: cement, ready mix concrete and aggregates, roof tiles and roofing products,
gypsum and specialty products. Lafarge employs approximately 66,000 people.

Cement

Lafarge is the second largest producer of cement in the world, with annualised 1999 production
capacity of 110 million tonnes.

Aggregates and ready mix concrete

Lafarge is the third largest ready mix concrete producer in the world and the second largest producer
of aggregates. The main products are gravel, sand, hard stone, ready mix concrete and dry mortars.

Roof tiles and roofing products

Lafarge is the world's largest producer of roof tiles. It is particularly strongly represented in the
European Union, where it has a leading market position in the roof tile market. Lafarge also has strong
market positions in Eastern Europe, Latin America and Asia, particularly Malaysia and Thailand.

Gypsum

Lafarge is one of the major international gypsum groups. In addition to gypsum wallboards, Lafarge
produces a variety of gypsum and gypsum related products, such as plasters in powder, gypsum
blocks, accessories, thermal and acoustic insulation systems as well as expanded and extruded
polystyrene and polyurethane.

Specialty products

Lafarge is a major international producer of a range of specialty products including finishes for
facades, floor adhesives, special cements, paints, formulated products, aluminates and monolithics.

In the year ended 31 December 1998, sales of the Lafarge Group were €9,802 million (1997 €6,413
million) and income before tax was €1,130 million (1997 €750 million). Earnings per share were €4.92
(1997 €4.15). Stockholders' equity as at 31 December 1998 was €4,500 million.

In the six months ended 30 June 1999, sales of the Lafarge Group were €4,862 million (1998 €4,578
                                                                                               02/01/2000

million) and income before tax was €623 million (1998 €525 million). Earnings per share were €2.26
(1998 €1.89).

Group sales for the year ended 1999 were €10,582 million (1998 €9,802 million). Lafarge believes
that, in the absence of unforeseen circumstances, its full year results in respect of the financial year
ended 31 December 1999 will be in line with market expectations.

5. Background to and reasons for the Offer

Blue Circle used to be one of the world's leading cement companies but has forfeited this position and
now has significantly less production capacity than each of the world's four largest producers. Lafarge
believes that, in the competitive world of international cement, Blue Circle will find it difficult and
potentially expensive to regain a position as a world leader.

During the 1980s and into the early 1990s, Blue Circle reduced its global cement and aggregates
activities by selling a number of investments throughout the world, raising approximately £500 million
in cash. In the same period, Blue Circle pursued a diversification strategy and invested over £800
million in acquisitions to develop businesses primarily in heating, bathroom products and cookers. This
strategy has now been reversed and all of these businesses have been sold, mostly in the last 2
years, for a total consideration of approximately £800 million, no more than they cost to buy a decade
or more ago.

Over the last decade, because of the resources consumed in its diversification strategy, Blue Circle's
total cement production capacity has fallen significantly behind that of its major international
competitors, which have continued to build their cement businesses organically and by acquisition.

In addition, unlike its major international competitors, Blue Circle's profitability is heavily dependent on
only seven countries; the UK, USA, Canada, Malaysia, Chile, the Philippines and, prospectively,
Greece. This over-dependence on a small number of operating territories means that Blue Circle's
profitability is inherently volatile. Blue Circle has invested over £700 million in cement capacity in Asia
during the last two years but, despite this, Blue Circle has stated that it is likely to report operating
losses in Asia for the year ended 31 December 1999 and that, in 2000, Chile and Asia are likely to
start from a lower than expected base, significantly so in the case of Asia.

Lafarge believes that the outlook for Blue Circle remains unpromising:

. its positions in Europe and North America are underdeveloped relative to its major international
competitors

. group profits are too heavily exposed to market conditions in individual developing economies

. in the UK cement market, costs are high and prices may come under pressure as its major
customers adjust to the consequences of recent corporate activity in the sector

. given its dependence on cement, it risks being forced into making further cement acquisitions at high
prices in order to address the geographical imbalance in its asset portfolio

These difficulties are reflected in Blue Circle's financial performance:

. operating margins fell in 1998 relative to 1997 and will have been lower again in 1999

. earnings per share before exceptional items, on the basis of a consensus of leading analysts'
forecasts, will be lower in 1999 than in 1997 and are forecast to be lower in 1999 and 2000 than in
1998

As a consequence, Blue Circle's share price, at 314.25p on 27 January 2000, was approximately 12
                                                                                              02/01/2000

per cent. lower than on 2 January 1997.

The combination of Lafarge and Blue Circle is a natural partnership in cement. The extent of Lafarge's
operations both in cement and in other products will neutralise the inherent volatility in profits from
which Blue Circle suffers.

Following the acquisition Lafarge will:

. be the world's largest producer of cement with annualised production capacity of approximately 150
million tonnes

. significantly enhance its existing operations in North America, the UK, sub-Saharan Africa, the
Philippines and Egypt

. secure new ready mix concrete and cement opportunities in Malaysia, Greece and Chile

Lafarge has the management strength and global presence to extract value from the businesses
owned by Blue Circle and the skills to improve the operating performance of these operations,
particularly in developing markets. In addition, Lafarge has the experience to maximise the value of
the synergy benefits which can be realised from a combination of the two businesses.

6. Financing and pre-condition

It is intended that the Offer will be financed partly with the proceeds of an issue, by way of rights, of
new Lafarge bonds (automatically convertible into new ordinary shares in Lafarge upon the Offer
becoming or being declared unconditional in all respects) with warrants attached and partly through a
new bank facility. It is intended that the rights issue will be underwritten by BNP Paribas and Dresdner
Kleinwort Benson and a syndicate of other banks and that the new bank facility will be underwritten by
Banque Nationale de Paris S.A. and Dresdner Bank AG London Branch. The Offer is subject to the
pre-condition that funding for the Offer is arranged on terms satisfactory to Lafarge by no later than the
close of business on 22 February 2000. This pre-condition is not waivable by Lafarge.

7. Management and employees

The existing employment rights, including pension rights, of the management and employees of the
Blue Circle Group will be fully safeguarded.

8. Blue Circle Share Option Schemes

The Offer will extend to Blue Circle Shares currently in issue, or allotted or issued prior to the date on
which the Offer closes (or such earlier date, not being earlier than the date on which the Offer
becomes or is declared unconditional as to acceptances, or, if later, the first closing date of the Offer,
as Lafarge may, subject to the Code, decide) as a result of the exercise of options granted under the
Blue Circle Share Option Schemes. Appropriate proposals will be made to optionholders under the
Blue Circle Share Option Schemes following the Offer becoming or being declared unconditional in all
respects.

9. Offer for Blue Circle Convertible Bonds

An offer will also be made for the Blue Circle Convertible Bonds, conditional on the Offer becoming or
being declared unconditional in all respects.

10. General

Subject to satisfaction of the pre-condition set out above, the formal documents relating to the Offer
will be dispatched shortly thereafter.
                                                                                             02/01/2000


Neither Lafarge nor, so far as Lafarge is aware, any party acting in concert with Lafarge owns or
controls any Blue Circle Shares or holds any options to purchase Blue Circle Shares or has entered
into any derivative contract referenced to Blue Circle Shares which remains outstanding. In the
interests of confidentiality, Lafarge has not made any enquiries in this respect of certain parties who
may be deemed by the Panel to be acting in concert with it for the purposes of the Offer.

Appendix II contains details of certain terms used in this document.


Enquiries:

Lafarge                                              + 331 4434 1111
Denis Berthu                                         0207 831 3113
Denis Boulet
Dresdner Kleinwort Benson                            0207 623 8000
Kieran Murphy
Rosalind Hedley-Miller
Jonathan Flory                                       + 331 4470 8500
BNP Paribas                                          + 331 4291234
Thierry Varene
Ludovic de Montille
Keith Allen                                          0207 548 9548

Financial Dynamics                                   0207 831 3113
Steve Jacobs
Scott Fulton

Kleinwort Benson Limited ("Dresdner Kleinwort Benson"), which is regulated by The Securities and
Futures Authority Limited, is acting for Lafarge and the Offeror and no one else in connection with the
Offer and will not be responsible to anyone other than Lafarge and the Offeror for providing the
protections afforded to customers of Dresdner Kleinwort Benson or for giving advice in relation to the
Offer.

BNP UK Corporate Finance, a division of BNP London Branch which is a branch of Banque Nationale
de Paris S.A., and Paribas, the London branch of Paribas S.A., (together "BNP Paribas") which are
regulated in the United Kingdom by The Securities and Futures Authority Limited, are acting for
Lafarge and the Offeror and no one else in connection with the Offer and will not be responsible to
anyone other than Lafarge and the Offeror for providing the protections afforded to customers of BNP
Paribas for giving advice in relation to the Offer.

Dresdner Kleinwort Benson and BNP Paribas have approved this document solely for the purposes of
Section 57 of the Financial Services Act 1986.


Appendix I




Conditions of the Offer
                                                                                               02/01/2000




The Offer will be subject to the following conditions:


(a) valid acceptances being received (and not, where permitted, withdrawn) by not later than 3.00
p.m., on the first closing date of the Offer (or such later time(s) and/or date(s) as Lafarge may, subject
to the rules of the Code, decide) in respect of not less than 90 per cent. (or such lower percentage as
Lafarge may decide) in nominal value of the Blue Circle Shares to which the Offer relates, provided
that this condition shall not be satisfied unless Lafarge and/or its subsidiaries shall have acquired or
agreed to acquire (whether pursuant to the Offer or otherwise) Blue Circle Shares carrying more than
50 per cent. of the voting rights then exercisable at a general meeting of Blue Circle;


For the purposes of this condition:


(i) shares which have been unconditionally allotted shall be deemed to carry the voting rights they will
carry upon their being entered in the register of members of Blue Circle; and


(ii) the expression "Blue Circle Shares to which the Offer relates" shall mean (i) Blue Circle Shares
issued or allotted on or before the date the Offer is made; and (ii) Blue Circle Shares issued or allotted
after that date but before the time at which the Offer closes, or such earlier date as Lafarge may,
subject to the Code, decide (not being earlier than the date on which the Offer becomes or is declared
unconditional as to acceptances or, if later, the first closing date of the Offer) but excluding any Blue
Circle Shares which, on the date the Offer is made, are held (otherwise than under such a contract as
is described in section 428(5) of the Companies Act 1985 (as amended)) or contracted to be acquired
by Lafarge and/or its associates (within the meaning of section 430E of the Companies Act 1985, as
amended); and


(iii) valid acceptances shall be treated as having been received in respect of any Blue Circle Shares
which Lafarge and its subsidiaries shall, pursuant to section 429(8) of the Companies Act 1985, as
amended, be treated as having acquired or contracted to acquire by virtue of acceptance of the Offer;


(b) to the extent that Council Regulation EEC 4064/89, as amended, may be applicable, the European
Commission having either;


(i) indicated that the Offer or its implementation does not give rise to a concentration falling within the
scope of Council Regulation (EEC) 4064/89 concerning the control of concentrations between
undertakings (as amended) (the "Regulation"); or


(ii) taken a decision, without imposing any conditions or obligations that are not satisfactory to Lafarge
under Article 6(1)(b) of the Regulation, declaring the Offer or its implementation compatible with the
common market, or being deemed to have done so under Article 10(6); or


(iii) referred the whole or part of the Offer or its implementation to the competent authorities of one or
more Member States under Article 9(3) of the Regulation or having been deemed to have done so
under Article 9(5); and


(aa) each such authority granting a clearance without imposing any conditions or obligations that are
not satisfactory to Lafarge in respect of all of those parts of the Offer or its implementation which were
referred to it, or being deemed to have granted such a clearance; and
                                                                                               02/01/2000


(bb) the requirements of paragraph (b)(ii) above being satisfied with respect to any part not referred to
the competent authority of any Member State;


(c) insofar as the merger provisions of the Fair Trading Act 1973 may be applicable, whether in
accordance with (b)(iii) above or otherwise, the Office of Fair Trading in the United Kingdom indicating,
in terms satisfactory to Lafarge, that it is not the intention of the Secretary of State for Trade to refer
the proposed acquisition of Blue Circle by Lafarge Group or any matter arising therefrom or related
thereto to the Competition Commission;


(d) all necessary filings having been made, all appropriate waiting periods (including extensions
thereof) under the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the
regulations made thereunder and Part IX of the Competition Act (Canada) and the Notifiable
Transactions Regulations issued thereunder having expired, lapsed or been terminated, in each case
in respect of the Offer and the acquisition of any shares in, or control of, Blue Circle by Lafarge or any
member of the Lafarge Group;


(e) no government or governmental, quasi-governmental, supranational, statutory, regulatory or
investigative body (including any national anti-trust or merger control authorities), court, trade agency,
professional association, institution or professional or environmental body or any other person or body
whatsoever in any jurisdiction (each a "Third Party") having done anything which, in each case, would
or might:


(i) make the Offer or its implementation, or the acquisition or proposed acquisition by Lafarge or any of
its subsidiary undertakings or associated undertakings (including any joint venture, partnership, firm or
company in which Lafarge and/or any such undertaking (aggregating their interests) has a substantial
interest) (together, the "wider Lafarge Group") of any shares in, or control of, Blue Circle or any
member of the wider Blue Circle Group (as defined below), or any of the assets of such a member
void, illegal or unenforceable under any jurisdiction, or otherwise, directly or indirectly, restrain,
prohibit, restrict or delay the same, impede or impose additional conditions or obligations with respect
thereto, or otherwise challenge or interfere therewith;


(ii) require, prevent or delay a divestiture by any member of the wider Lafarge Group of any of the
shares or other securities (or the equivalent) in Blue Circle or any member of the wider Blue Circle
Group (as defined below);


(iii) require, prevent or delay the divestiture or alter the terms envisaged for any proposed divestiture
by any member of the wider Lafarge Group or by Blue Circle or any of Blue Circle's subsidiary
undertakings or associated undertakings (including any joint venture, partnership, firm or company in
which Blue Circle and/or any such undertaking (aggregating their interests) has a substantial interest)
(together, the "wider Blue Circle Group") of all or any portion of their respective businesses, assets or
property or impose any limitation on the ability of any of them to conduct their respective businesses
(or any of them) or own their respective assets or properties or any part thereof;


(iv) impose any limitation on, or result in a delay in, the ability of any member of the wider Lafarge
Group to acquire, or to hold or to exercise effectively, directly or indirectly, all or any rights of
ownership of shares or other securities (or the equivalent) in or to exercise voting or management
control over, Blue Circle or any member of the wider Blue Circle Group or on the ability of any member
of the wider Blue Circle Group to hold or exercise effectively, directly or indirectly, all or any rights of
ownership of shares or other securities (or the equivalent) in, or to exercise voting or management
control over, any member of the wider Blue Circle Group;
                                                                                               02/01/2000

(v) save pursuant to the Offer or Part XIIIA of the Companies Act 1985 (as amended) require any
member of the wider Lafarge Group or the wider Blue Circle Group to acquire, or to offer to acquire,
any shares or other securities (or the equivalent) in, or any asset owned by, any member of the wider
Blue Circle Group owned by any third party;


(vi) require any member of the wider Blue Circle Group and/or the wider Lafarge Group to sell, or offer
to sell, any shares or other securities (or the equivalent) in, or any asset owned by, any member of the
wider Blue Circle Group and/or the wider Lafarge Group;


(vii) impose any limitation on the ability of any member of the wider Lafarge Group or the wider Blue
Circle Group to integrate or co-ordinate its business, or any part of it, with the businesses or any part
of the businesses of any other member of the wider Lafarge Group and/or the wider Blue Circle Group;


(viii) result in any member of the wider Lafarge Group or the wider Blue Circle Group ceasing to be
able to carry on business under any name under which it presently does so; or


(ix) otherwise adversely affect the business, profits, financial or trading position or prospects of any
member of the wider Lafarge Group or any member of the wider Blue Circle Group;


and all applicable waiting periods and any other time periods during which any Third Party could, in
respect of the Offer or the acquisition or proposed acquisition of any shares or other securities (or the
equivalent thereof) in, or control of, Blue Circle or any member of the wider Blue Circle Group or any
member of the wider Lafarge Group institute, implement or threaten any action, proceeding, suit,
investigation, enquiry or reference under the laws of any jurisdiction having expired, lapsed or been
terminated;


(f) all necessary notifications and filings having been made in connection with the Offer and the
proposed acquisition by Lafarge Group of Blue Circle and all necessary waiting and other time periods
under any applicable legislation and regulations in any jurisdiction in connection with the Offer and the
proposed acquisition by Lafarge Group of Blue Circle having expired, lapsed or having been
terminated (as appropriate) and all statutory or regulatory obligations in any jurisdiction having been
complied with in connection with the Offer or its implementation and/or the acquisition or proposed
acquisition by any member of the wider Lafarge Group of any shares or other securities (or the
equivalent thereof) in, or control of, Blue Circle or any member of the wider Blue Circle Group or any of
the assets of any such member and all authorisations, orders, recognitions, grants, consents,
clearances, confirmations, certificates, licences, permissions, exemptions and approvals
("Authorisations") deemed necessary or appropriate by Lafarge for or in respect of the Offer or the
acquisition or proposed acquisition of any shares or other securities (or the equivalent thereof) in, or
control of Blue Circle by any member of the wider Lafarge Group or the issue or offering of any new
securities in Lafarge having been obtained in terms and in a form satisfactory to Lafarge from all
appropriate Third Parties and all such Authorisations, together with such authorisations and
determinations necessary or appropriate for any member of the wider Lafarge Group or the wider Blue
Circle Group to carry on a business, remaining in full force and effect and there being no intimation of
an intention to revoke, restrict or not to renew the same at the time at which the Offer becomes
otherwise unconditional, provided that such Authorisations shall not impose any conditions or require
the taking or refraining from taking of any action by Lafarge or one or more members of the wider Blue
Circle Group which would in the reasonable opinion of Lafarge be materially burdensome or onerous
in the context of the wider Blue Circle Group;


(g) there being no provision of any arrangement, agreement, licence, franchise, facility, lease or other
instrument to which any member of the wider Blue Circle Group is a party or by or to which any such
member or any of its assets may be bound, entitled or be subject and which, in consequence of the
Offer or the acquisition or proposed acquisition by any member of the wider Lafarge Group of some or
                                                                                               02/01/2000

all of the share capital or assets of Blue Circle or any member of the wider Blue Circle Group or
because of a change in the control or management of Blue Circle or any member of the wider Blue
Circle Group or otherwise, could or might reasonably be expected to result in:


(i) any monies borrowed by, or any indebtedness or liability (actual or contingent) of, or any grant
available to any member of the wider Blue Circle Group becoming, or becoming capable of being
declared, repayable immediately or prior to their or its stated maturity or the ability of any such
member to borrow monies or incur any indebtedness being withdrawn or inhibited;


(ii) the creation or enforcement of any mortgage, charge or other security interest whether arising or
having arisen over the whole or any part of the business, property or assets of any member of the
wider Blue Circle Group or any such mortgage, charge or other security interest becoming
enforceable;


(iii) any such arrangement, agreement, licence, franchise, facility, lease or other instrument or the
rights, liabilities, obligations or interests thereunder being terminated or adversely modified or affected
or any action being taken or any obligation or liability arising thereunder;


(iv) any assets or interests of, or any asset the use of which is enjoyed by, any member of the wider
Blue Circle Group being or falling to be disposed of or charged, or ceasing to be available to any
member of the wider Blue Circle Group, or any right arising under which any such asset or interest
could be required to be disposed of or charged or could cease to be available to any member of the
wider Blue Circle Group otherwise than in the ordinary course of business;


(v) any member of the wider Blue Circle Group ceasing to be able to carry on business under any
name under which it presently does so;


(vi) the rights, liabilities, obligations or interests of any member of the wider Blue Circle Group under
any such arrangement, agreement, licence, franchise, facility, lease or other instrument in or with any
person, firm or body or the business of any member of the wider Blue Circle Group with any person,
firm or body (or any arrangement or arrangements relating to any such interest or business) being
terminated, or adversely modified or affected;


(vii) the value of, or financial or trading position or prospects of, any member of the wider Blue Circle
Group being prejudiced or adversely affected; or


(viii) the creation of material liabilities (actual or contingent) by any member of the wider Blue Circle
Group;


(h) no member of the wider Blue Circle Group having, since 31 December 1998, being the date to
which the last published audited report and accounts of Blue Circle were made up, save as disclosed
in such report and accounts or publicly announced by Blue Circle in the interim results of the Blue
Circle Group for the six months ended 30 June 1999 or, prior to 1 February 2000, publicly announced
by Blue Circle on the London Stock Exchange:


(i) issued or agreed to issue, or authorised or proposed the issue of, additional shares of any class, or
securities convertible into or exchangeable for, or rights, warrants or options to subscribe for or
acquire, any such shares or convertible securities (save for issues to Blue Circle or wholly-owned
subsidiaries of Blue Circle);
                                                                                               02/01/2000

(ii) recommended, declared, paid or made or proposed to recommend, declare, pay or make any
bonus, dividend or other distribution other than dividends lawfully paid to another member of the Blue
Circle Group;


(iii) save for transactions between two or more members of the Blue Circle Group ("intra-Blue Circle
Group transactions"), made or authorised or proposed or announced its intention to propose any
change in its loan capital;


(iv) save for intra-Blue Circle Group transactions, implemented, authorised, proposed or announced its
intention to propose any merger, demerger, reconstruction, amalgamation, scheme, commitment or
acquisition or disposal of assets or shares (or the equivalent thereof) in any undertaking or
undertakings, other than, in the case of a disposal, in the ordinary course of business, or entered into
or changed or made any offer (which remains open for acceptance) to enter into or change the terms
of any contract with any director or senior executive of any member of the wider Blue Circle Group;


(v) issued, authorised or proposed, or announced an intention to authorise or propose, the issue of
any debentures or (save in the ordinary course of business and save for intra-Blue Circle Group
transactions) incurred any indebtedness or contingent liability;


(vi) purchased, redeemed or repaid, or announced any proposal to purchase, redeem or repay, any of
its own shares or other securities (or the equivalent) or reduced or made any other change to or
proposed the reduction of, or other change to, any part of its share capital;


(vii) save for intra-Blue Circle Group transactions, merged with any body corporate, partnership or
business or (other than in the ordinary course of business) acquired or disposed of, transferred,
mortgaged or encumbered any assets or any right, title or interest in any asset (including shares and
trade investments) or authorised, proposed or announced its intention to do so;


(viii) entered into or varied or authorised, proposed or announced its intention to enter into or vary any
contract, transaction, arrangement or commitment (whether in respect of capital expenditure or
otherwise) which is of a long term, onerous, or unusual nature or magnitude, or which involves or
could involve an obligation of such a nature or magnitude;


(ix) entered into or varied or authorised, proposed or announced its intention to enter into or vary any
contract, transaction or arrangement otherwise than in the ordinary course of business;


(x) entered into or varied or authorised, proposed or announced its intention to enter into or vary any
contract, transaction, arrangement or commitment which would be restrictive on the business of any
member of the wider Lafarge Group or the wider Blue Circle Group or which could be so restrictive;


(xi) waived or compromised any claim;


(xii) been unable, or admitted in writing that it is unable, to pay its debts or having stopped or
suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened
to cease carrying on all or a substantial part of any business;


(xiii) save for voluntary solvent liquidations, taken any corporate action or had any legal proceeding
instituted or threatened against it in respect of its winding-up, dissolution or reorganisation or for the
appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any
material part of its assets or revenues or taken any analogous proceedings in any jurisdiction or
                                                                                                02/01/2000

appointed any analogous person in any jurisdiction; or


(xiv) entered into any agreement or passed any resolution or made any proposal or announcement
with respect to, or to effect, any of the transactions, matters or events referred to in this condition (h);


(i) since 31 December 1998, save as disclosed by Blue Circle in its report and accounts made up to
that date or publicly announced by Blue Circle in the interim results of the Blue Circle Group for the six
months ended 30 June 1999 or, prior to 1 February 2000, publicly announced by Blue Circle on the
London Stock Exchange;


(i) there having been no adverse change or deterioration in the business, assets, financial or trading
position or profits or prospects of Blue Circle or any member of the wider Blue Circle Group;


(ii) no litigation, arbitration proceedings, prosecution or other legal proceedings to which any member
of the wider Blue Circle Group is or may become a party (whether as plaintiff or defendant or
otherwise) and no investigation by any Third Party against or in respect of any member of the wider
Blue Circle Group having been threatened, announced or instituted or remaining outstanding by,
against or in respect of any member of the wider Blue Circle Group which in any such case might
adversely affect any member of the wider Blue Circle Group; and


(iii) no contingent or other liability having arisen or become apparent to any member of the wider
Lafarge Group which might reasonably be expected to affect adversely any member of the wider Blue
Circle Group;


(j) no member of the wider Lafarge Group having discovered:


(i) that the financial, business or other information concerning the wider Blue Circle Group which has
been disclosed at any time by or on behalf of any member of the wider Blue Circle Group whether
publicly, to any member of the wider Lafarge Group or otherwise is misleading, contains a
misrepresentation of fact or omits to state a fact necessary to make the information contained therein
not misleading;


(ii) any information which affects the import of any information disclosed at any time by or on behalf of
any member of the wider Blue Circle Group;


(iii) that any member of the wider Blue Circle Group or any partnership, company or other entity in
which any member of the wider Blue Circle Group has an interest and which is not a subsidiary
undertaking of Blue Circle is subject to any liability, contingent or otherwise, which is not disclosed in
the report and accounts of Blue Circle for the financial year ended 31 December 1998 or in the interim
results of the Blue Circle Group for the six months ended 30 June 1999 or, prior to 1 February 2000,
publicly announced by Blue Circle on the London Stock Exchange;


(iv) in relation to any release, emission, discharge, disposal or other fact or circumstance which has
caused or might impair the environment or harm human health, no past or present member of the
wider Blue Circle Group having: (A) committed any violation of any laws, statutes, regulations, notices
or other requirements of any Third Party; and/or (B) incurred any liability (whether actual or contingent)
to any Third Party;


(v) that there is, or is likely to be, any liability, whether actual or contingent, to make good, repair,
reinstate or clean up any property now or previously owned, occupied or made use of by any past or
                                                                                                02/01/2000

present member of the wider Blue Circle Group or any other property or any controlled waters under
any environmental legislation, regulation, notice, circular, order or other lawful requirement of any
relevant authority (whether by formal notice or order or not) or Third Party or otherwise; or


(vi) that circumstances exist which are likely to result in any actual or contingent liability of any
member of the wider Blue Circle Group under any applicable legislation referred to in sub-paragraph
(j)(iv) above to impose or modify existing plant, machinery or equipment or install new plant,
machinery or equipment or to carry out any changes in the processes currently carried out.


For the purposes of these conditions:


(i) "parent undertaking", "subsidiary undertaking", "associated undertaking" and "undertaking" have the
meanings given by the Companies Act 1985 (as amended), but for this purpose ignoring paragraph
20(1)(b) of Schedule 4A of the Companies Act 1985 (as amended); and


(ii) "substantial interest" means a direct or indirect interest in 20 per cent. or more of the voting equity
capital of an undertaking.


Subject to the requirements of the Panel, Lafarge reserves the right (but shall be under no obligation)
to waive, in whole or in part, all or any of the above conditions apart from condition (a). If Lafarge is
required by the Panel to make an offer for Blue Circle Shares under the provisions of Rule 9 of the
Code, Lafarge may make such alterations to the above conditions of the Offer, including condition (a),
as are necessary to comply with the provisions of that Rule.


The Offer will lapse unless all of the conditions have been fulfilled or (if capable of waiver) waived by
midnight on whichever is the later of 21 days after (i) the first closing date of the Offer and (ii) the date
on which condition (a) is fulfilled (or such later date as Lafarge may with the consent of the Panel
decide).


Lafarge shall not be obliged to waive (if capable of waiver) or to treat as satisfied any condition until
the latest date for the fulfillment of all conditions referred to in the previous sentence, notwithstanding
that the other conditions of the Offer may at such earlier date have been waived or fulfilled and that
there are at such earlier date no circumstances indicating that any of such conditions may not be
capable of fulfillment.


The Offer will lapse if in relation to the proposed acquisition of Blue Circle (i) the European
Commission initiates proceedings under Article 6(1)(c) of the Regulation; or (ii) following a referral by
the European Commission under Article 9(1) of the Regulation to a competent authority in the UK,
there is a reference to the Competition Commission in either case before 3.00 p.m. on the first closing
date of the Offer or, if later, the date on which the Offer becomes or is declared unconditional as to
acceptances.


If the Offer lapses, it will cease to be capable of further acceptance and persons accepting the Offer
and Lafarge shall thereupon cease to be bound by acceptances delivered on or before the date on
which the Offer so lapses.




Appendix II
                                                                                         02/01/2000




Definitions


The following definitions apply throughout this announcement, unless the context otherwise requires:

"Blue Circle"                      Blue Circle Industries PLC



"Blue Circle Convertible           6 7/8 per cent. subordinated convertible bonds due 2002 in Blue
Bonds"                             Circle



"Blue Circle Group"                Blue Circle and its subsidiary undertakings



"Blue Circle Shares"               Ordinary shares of 50 pence each in Blue Circle



"Blue Circle Share Option          the Blue Circle Executive Option Scheme, the Blue Circle
Schemes"                           Savings-Related Option Scheme and the Birmid Qualcast
                                   Executive Option Scheme



"Code"                             the City Code on Takeovers and Mergers



"Dresdner Kleinwort Benson"        Kleinwort Benson Limited



"Form of Acceptance"               The form of acceptance relating to the Offer



"Lafarge "                         Lafarge S.A.



"Lafarge Group"                    Lafarge and its subsidiary undertakings



"Listing Rules"                    the Listing Rules of the London Stock Exchange



"London Stock Exchange"            London Stock Exchange Limited



"Offer Document"                   the document containing the Offer to be despatched to Blue Circle
                                   shareholders
                                                                                   02/01/2000

"Offer"                    the offer, subject to the terms, pre-condition and conditions set out
                           in this announcement and to be set out in the Offer Document and
                           the Form of Acceptance to be made to acquire all of the Blue
                           Circle Shares and, where the context permits, any subsequent
                           revision, variation, extension or renewal of such offer



"Offeror"                  the wholly-owned subsidiary of Lafarge on behalf of which the
                           Offer will be made



"Panel"                    the Panel on Takeovers and Mergers



"UK" or "United Kingdom"   the United Kingdom of Great Britain and Northern Ireland



"USA" or "United States"   the United States of America (including the District of Colombia),
                           its territories and possessions, any state of the United States of
                           America and all other areas subject to its jurisdiction

				
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