Lafarge of France is to buy Egypt’s Orascom Cement for 8.8 billion euros. Lafarge, which is the world’s largest cement maker, will finance the acquisition with six billion euros of debt. It will also raise 2.8 billion euros of new shares. Lafarge said the acquisition would give it a leading position in the Middle East and Mediterranean region.
Nassef Sawiris, a shareholder in Orascom Cement’s parent company, Orascom Construction Industries will take an 11.4% stake in Lafarge, including the new shares and will get a seat on its board. Belgian company Groupe Bruxelles Lambert – the investment company of billionaire Albert Frere – will also join Lafarge’s board of directors.
Lafarge’s shares jumped in value, rising 13%, on the grounds that its getting access to emerging markets with strong growth potential. Orascom Construction Industries fell 4.3%. The cement unit accounted for seventy per cent of its earnings and as one analyst in Cairo said: “The cash cow has just been cashed in.”