Shares in materials giant rise 25% as HeidelbergCement considers formal approach

The materials sector was gripped by consolidation fever this week as German cement company HeidelbergCement revealed it was considering a bid for Hanson, the last large independent UK materials firm.

Alan Murray
The man in the spotlight: Alan Murray, chief executive of Hanson

Shares in Hanson rose almost 25% after HeidelbergCement announced it was reviewing its options and may attempt an acquisition. It is thought a formal bid may prompt a rival approach from French materials giant Lafarge or a private equity firm.

Speculation around the takeover of Baggeridge Brick, Hanson’s smaller listed rival, also intensified this week. Baggeridge is the subject of a recommended offer from Austrian company Wienerberger, but UK firm Michelmersh, which is listed on the alternative investment market, has raised its stake in the firm to 17%. Baggeridge may consider rescinding its recommendation to capitalise on its high share price, which has risen 1.2% to 219p since the Wienerberger offer.

There has been a trend for vertical integration in the materials sector in recent years, with deals including Lafarge’s £3.1bn takeover of Blue Circle in 2001 and Cemex’s acquisition of RMC in 2005. Cemex has been tipped as a suitor for Hanson but its current £14.3bn bid for Australian firm Rinker makes a move unlikely.

Allan Wilén, economics director of the Construction Products Association, said a takeover of Hanson by a foreign company was unlikely to have an adverse impact on the UK industry.