PAI, LBO France Vie to Buy Lafarge's Roof-Tile Unit,

PAI, LBO France Vie to Buy Lafarge's Roof-Tile Unit, People Say
PAI Partners and LBO France, two Paris-based private-equity firms, are vying to purchase Lafarge SA's roof-tile unit for about 2 billion euros ($2.6 billion), according to three people familiar with the negotiations.
Lafarge, the world's biggest maker of building materials, may announce the winner as soon as next week, said the people, who declined to be identified because the talks are confidential. Philippe Hardouin, a spokesman for Lafarge, declined to comment.
Chief Executive Officer Bruno Lafont wants to sell the roof- tile division, which accounts for about 10 percent of Lafarge's 16 billion euros in annual sales, to raise cash to invest in the more profitable cement market. Roofing was the only unit at the French company to post a drop in earnings last year, hurt by slumping demand in Germany, where the operation is based.
``This business is really a play on the German housing market and whether it will recover or not in the next few years,'' said Tobias Woerner, an analyst at Man Financial in London with a ``buy'' recommendation on Paris-based Lafarge. ``I think it will, so at the right price it should be a good deal.''
Michael Sandler, a spokesman for PAI in London, declined to comment, as did a spokeswoman for LBO France.
Lafarge shares had slipped 1.4 euros, or 1.3 percent, to 108.7 euros as of 2:46 p.m. in Paris today. They've advanced 43 percent this year, giving a market value of 19.2 billion euros.
Lafarge Chief Executive Officer Bruno Lafont said on June 22 that he'd invite bids for the roofing operation. Man's Woerner said he expects the company to keep a stake in the unit.
Chimneys
Based near Frankfurt, the division is the world's largest maker of clay and concrete tiles and each year produces enough to cover 1.5 million houses, together with chimneys for a further 165,000. It had annual sales of 1.5 billion euros last year, less than when Lafarge acquired the operation through the 2.1 billion-pound ($4.1 billion) purchase of Redland Plc in 1998. Operating profit of 98 million euros is down 60 percent.
Thomas Melzer, a spokesman for Wienerberger AG, the world's biggest brickmaker, today declined to rule the Vienna- based company out of the bidding for the tile business when contact by Bloomberg. He had previously indicated that Wienerberger might make an offer.
Lafarge's roofing division gets more than 20 percent of its sales from a German building market that's declined every year for the past decade. The HDB German builders' association said on Sept. 20 that the slide might end this year, forecasting growth in the industry of as much 2 percent.
French LBO Surge
Buyout firms use their own funds and debt secured on the businesses they acquire to pay for takeovers. They typically seek to expand companies or improve their performance before selling them within five years to other funds or investors. The firms have announced almost $20 billion of takeovers in France so far this year, up from $10.7 billion in the equivalent period a year earlier, according to data compiled by Bloomberg.
If successful, LBO France would add the Lafarge unit to other investments including French tile maker Groupe Terreal, which it purchased for about 860 million euros last year.
PAI, which raised a 2.7 billion-euro buyout fund last year, owns U.K. car-repair chain Kwik-Fit Group Ltd. and yogurt maker Yoplait.