Disposals necessary to secure Tarmac deal
AS expected, Anglo American will have to offer a number of quarries and plants for divestment in order to prevent their £1.2 billion bid for Tarmac being referred to the Competition Commission.
Last month, in accordance with advice from the Office of Fair Trading, Competition Minister Kim Howells said he would be seeking undertakings from Anglo American to reduce their share in the markets for aggregates, asphalt, ready-mixed concrete and mortar as a way of defusing the competition concerns raised by the proposed merger.
It is understood that the combined group will have to reduce its market share in aggregates and asphalt to 33% or less in all production areas within a 30-mile radius of either company's quarries. For ready-mixed concrete, market share must be 40% or less in all production areas within a 10-mile radius of another ready-mixed concrete plant, while in areas where there are at least four other significant competitors, including at least one which is not a national participant, market share will have to be reduced to 50% or less.
Although Anglo American have agreed to comply with such undertakings and have offered a number of sites for divestment, the newly formed British Aggregates Association, which is strongly opposed to the deal, has renewed its call for the takeover bid to be referred to the Competition Commission. It argues that most of the resources earmarked for disposal are likely to be closed down soon anyway owing to planning/environmental/geological problems, limited reserves or other commercial considerations. However, in a joint response, Anglo American and Tarmac refuted the BAA's claims, saying the plants will be acquired by existing competitors as 'going concerns', and that many approaches have already been received, confirming 'substantial interest' in the available assets.