Lagan assets valued at €350m

Lagan Group's asphalt and quarrying operations on both sides of the Border have been valued at up to €350 million in advance of their sale by the Belfast-based engineering and construction materials organisation.

Millionaire brothers Kevin and Michael Lagan have engaged HSBC as corporate finance advisers for the sale process, which is likely to proceed within weeks. A prospectus is not yet available but preparatory work for the sell-off has been under way for some time.

Lagan's 10 Irish quarries have an annual output of more than 3.6 million tonnes. With a combined production capacity of about 2.2 million tonnes of coated material, the group ranks among the largest Irish suppliers of asphalt materials.

Senior industry sources with no connection to the Lagan Group said its asphalt and quarrying operations were considered very attractive in construction circles.

As the sector gears up for the new National Development Plan, the sources said the Lagan assets were likely to draw bids from well-established local groups such as Siac, Kilsaran and Stanley Macadam.

Another possible bidder is Readymix, now owned by Mexican group Cemex, which has significantly restructured its operations since 2005.

Building materials giant CRH is unlikely to bid as any large increase in its domestic footprint would give rise to competition concerns.

Given the scale of the Lagan operation, bids from international groups are also possible.

Industry sources said it was not possible to gauge the value of the assets until the quarry reserves were quantified in the prospectus.

With some industry players suggesting a possible valuation of €250 million, the fact that Lagan's internal valuations are in the region of €350 million suggests that the reserves are significant.

The assets now on the market are understood to contribute about a quarter of the revenues at Lagan Group, whose combined turnover grew 12 per cent in 2006 to €493.91 million. Group operating profits rose 26 per cent to €51.15 million and pretax profits rose 39 per cent to €44.21 million.

Well known in the Republic for the 500-acre cement plant it operates at Kinnegad, Co Westmeath, Lagan's other activities are significant.

They include property development, home-building, brick manufacturing and other construction interests. An international division has operations in Europe, the Caribbean, Asia and South America.

Kevin and Michael Lagan have steadily expanded the business from the quarrying operation their father Peter established in 1960. They restructured the group in April 2004 into five separate companies, each following more closely its specific industry activity.

These include Lagan Holdings, to which the asphalt operations are affiliated, and Lagan Cement, which includes the Kinnegad plant, sand extraction business Mulholland Brothers and the Roadmix quarry business.

Lagan Brick owns Flemings Fireclays in Co Laois and Kingscourt Brick in Co Cavan. Lagan Developments concentrates on commercial property and Lagan Homes specialises in residential construction.