HeidelbergCement in talks to sell unit to Lone Star Funds

By Reuters

Dec 25, 2014 08:37 PM EST

Germany's HeidelbergCement AG (HEIG.DE) is negotiating to sell Hanson Building Products Ltd, a maker of concrete and clay building products, to private equity firm Lone Star Funds, according to people familiar with the matter.

HeidelbergCement is weighing a sale to Lone Star as a way to shed the non-core unit more quickly than through an initial public offering, the people said this week.

After final bids were submitted earlier this month, Lone Star has so far prevailed over other private equity firms in an auction for Hanson and could pay more than $1.3 billion for the unit, the people said.

However, HeidelbergCement has not yet decided whether to sell the unit outright. As part of a so-called dual-track process, HeidelbergCement registered Hanson with U.S. regulators for an IPO in September and could decide to opt for that route instead, the people noted.

The sources asked not to be identified because the negotiations are confidential and ongoing. Lone Star declined to comment, while Hanson and HeidelbergCement representatives did not respond to requests for comment.

Irving, Texas-based Hanson produces building materials used in residential and industrial construction, as well as water and transportation infrastructure. It has 107 manufacturing plants and eleven distribution facilities in North America and Britain.

The unit was part of Hanson Plc, a British building materials company that HeidelbergCement acquired for 7.85 billion pounds ($16 billion) in 2007. Since then, it has closed 70 plants and disposed of two businesses.

Hanson reported annual net sales of $1.2 billion, a net loss of $225.4 million and pro forma adjusted earnings before interest, tax, depreciation and amortization of $145.4 million as of the end of September.

Last month, HeidelbergCement reported a better-than-expected 10 percent rise in quarterly core profit, as energy costs fell and it pushed through price increases in North America, Britain and Indonesia.

Lone Star is no stranger to acquiring the unloved units of cement makers. Last year, it acquired Lafarge SA's (LAFP.PA) North American gypsum business for $700 million. It renamed the unit Continental Building Products Inc (CBPX.N) and took it public earlier this year. It currently has a value of $1.14 billion, including debt.

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