It may have taken its time but the deal is part of a sustained round of consolidation within the materials sector that is far ahead of such shifts within construction and housebuilding.
Analysts are predicting further moves in the sector, which could see RMC being picked up in the near future. Both Blue Circle and RMC saw significant share rises this week as a result of the activity, going up 29p to 490p and 27p to 677p respectively.
Analysts downplayed the impact of the Lafarge deal on the enlarged group's clients, that is, contractors and housebuilders. Prices would remain pretty steady in the short-term, one analyst mused. "I do not see the nature of the game will alter that much," he said.
However long-term consolidation will see the materials sector having more control on price, the analyst added. "They will have more pricing power. That means if, say fuel prices go up, they can hand it on to contractors pretty quick." Housebuilders seem to be on the up at the moment. Not only did Berkeley jump this week (see lead story) but there were other significant rises for BARRATT (up 7p to 314p), BELLWAY (up 7.5p to 357.5p), PERSIMMON (up 10p to 267p) and WESTBURY, which improved by 12.5p to 270p. Analysts thought this was in response to last week's cut in interest rates in the USA.
