26th Apr 2016 07:52
LONDON (Alliance News) - Breedon Aggregates Ltd on Tuesday said it welcomes the announcement from the UK Competition & Markets Authority that it will consider whether to accept the undertakings Breedon has offered instead of carrying out an in-depth merger investigation into its proposed acquisition of Hope Construction Materials Ltd.
Breedon entered into a deal with Cortolina Investments Sarl to buy Hope in November for GBP336.0 million in cash and shares. Breedon said the deal will create the largest independent building materials company in the UK.
Earlier this month, however, the CMA said the proposed acquisition could face being referred for an in-depth investigation, unless Breedon was able to address its competition concerns that the two are "major competitors in RMX", the ready-mixed concrete market, and that the merger could result in higher prices for customers.
This came after the CMA completed a phase 1 review of the merger of the two construction companies, which both produce and supply aggregates and the ready-mixed concrete RMX.
On Tuesday, the CMA said it has received proposed undertaking from Breedon to divest of 14 ready-mixed concrete sites to an up front buyer approved by the authority.
"CMA has decided that there are reasonable grounds for believing that the undertakings offered by Breedon, or a modified version of them, might be accepted by the CMA," the authority said in a statement.
The authority added that it has until June 23 to consider whether to accept the undertakings, or a modified version of them, although it said it may decide to extend this deadline to August 25 if it considers there are special reasons for doing so.
As part of this consideration process, the CMA will undertake a public consultation on whether the proposed undertakings are sufficient to address the competition concerns.
"If the undertakings are not accepted, the acquisition will be referred for a phase 2 merger investigation," the authority said.
"The company fully expects to be able to finalise the required undertakings to the CMA's satisfaction and complete the required divestments in the near future, paving the way for completion of the acquisition later this summer," said Breedon on Tuesday.
Shares in Breedon were up 0.6% at 75.33 pence on Tuesday.
By Hannah Boland; [email protected]; @Hannaheboland
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