French Parent Targets Huge but Little-Known Lafarge North America

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By Jerry Knight
Monday, February 13, 2006

The Washington area is preparing to bid a raucous au revoir to one of its biggest but least-known corporations -- one that arguably never should have existed.

Lafarge North America Inc., a giant cement maker based in Herndon, is considering a $3 billion buyout offer from the French parent that already owns 53 percent of its stock.

The local Lafarge is the biggest cement producer in North America. It is this continent's outpost of Lafarge SA, the biggest cement company in the world.

Lafarge North America was formed after the French company methodically rolled up more than a dozen cement makers in Canada and the United States and sold a minority interest to the public.

None of Lafarge's hundreds of production and distribution facilities are anywhere near Washington, but the headquarters is near Dulles International Airport -- for quick connections to the far-flung operations and to the home office in Paris.

Herndon, however, is a long way from Wall Street.

Not a single New York investment analyst follows Lafarge, even though the company has a stock market value of more than $6 billion and is the powerhouse in its business.

Lafarge was a major missed opportunity for Wall Street. The stock gave investors a 46 percent return over the past year -- including a 28 percent jump since the buyout bid was announced a week ago today.

The shares traded for $64.25 before the announcement and closed Friday at $82.

That's an extraordinary price, considering that the French Lafarge has offered to pay only $75 a share.

Wall Street may have overlooked Lafarge as a long-term investment, but it's not ignoring the possibility of making a quick buck on the buyout.

Speculators clearly think the $75 bid is too low -- even though it is 17 percent more than the pre-offer price and about 30 percent more than the stock has traded for over the past three months.


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