Dealmaker

Paris, Dec. 4 (Reuters): Lafarge is to sell its roofing business unit to private equity firm PAI Partners on the basis of an enterprise value of 2.4 billion euros ($3.18 billion), the world’s biggest cement maker said on Monday.

Lafarge said in a statement this value represented a multiple of nine times forecasted 2006 earnings before interest, tax, depreciation and amortisation.

It added the disposal would have a positive impact on Lafarge’s 2007 earnings per share.

The amount includes 1.96 billion euros in cash for the acquisition of the shares compared with an equity book value of 1.70 billion euros and approximately 420 million euros of debt and pension liabilities borne by the acquirer.

Under the deal, Lafarge is selling 100 per cent of the business but Lafarge will then buy a 35-per cent stake in the new roofing company for 215 million euros, a company spokeswoman said.

Lafarge shares were up 0.2 per cent at 108.50 euros by 3:31 am EST, with Oddo Securities describing the value of the transaction as “very satisfying” for Lafarge shareholders.

“The sale was expected and the price had already been mentioned in market rumours. Nevertheless, the announcement of the sale is good news for the stock. Lafarge is focusing on its core businesses and selling a unit that was destroying value,” Oddo said in a research note.

Lafarge had made a previous commitment to maintain a minority holding and the company will also keep seats on the board of the new business.

Lafarge’s roofing business has suffered in recent years from a fall in prices in Germany and the sale of the business comes as part of a broader strategic plan unveiled in February to boost profits.

Under the plan, Lafarge aims to cut costs by 400 million euros by 2008 and generate an extra 1.5 billion euros in cash over the next three years, helped by the disposal of non-core assets.

Based on latest prices, Lafarge shares have risen around 43 per cent since the start of 2006, outperforming a 28-per cent rise in the DJ Stoxx European construction sector.