Hanson the latest UK heavyweight to fall victim to takeover

The all-cash offer of 1,100p per share is the largest takeover in a sector which has been busy with M&A activity, and will create a company with a market value of 34bn.

The bid creates a building materials company which would challenge French glass and materials maker Saint Gobain.

The deal is a premium of almost 30 per cent to value of Hanson before the company announced it was in talks over a possible takeover on 2 May.

The combined group would have sales of around 15bn (10.3bn) and more than 70,000 employees.

It will also remove another institution and one of the last heavy industry companies from the London Stock Exchange. Formed in 1964 by James (later Lord) Hanson, the company rose through acquisition to be one of Britain's largest companies, with assets from toys to chemicals to tobacco. After selling off its non-building assets, Hanson rose to be the world's largest seller of aggregates such as crushed rock and gravel.

Although the deal requires the support of shareholder, it has the approval of the Hanson board. Shares immediately jumped on the news, closing up 50p on 1,107p.

Analysts said a counter-bid was unlikely with the current bid - at 12 times Hanson's 2006 EBITDA (earnings before interest, tax, depreciation and amortisation) - at a premium to recent deals in the sector.

Lafarge, the world's largest cement maker and the most likely rival suitor, already has large UK operations and so could face competition issues if it was to enter the battle.

"The price is high, but a company like Hanson does not come as a bargain," Heidelberg chief executive Bernd Scheifele said yesterday, calling the acquisition a "perfect fit".

Heidelberg expects synergy benefits of 200 million by the end of 2009, mainly from overlapping operational headquarters in Britain and North America, though Scheifele said the firm did not plan major job cuts.

The German company, majority owned by German billionaire Adolf Merckle, plans to finance the deal by issuing shares, selling debt and offloading non-core assets, which are thought to include Hanson's brick making division.

Deutsche Bank and Royal Bank of Scotland are underwriting the acquisition.

Hanson's UK business is divided into two divisions: Hanson Aggregates UK - headquartered in Reading, Berkshire, and operating from more than 400 locations - and Hanson Building Products UK, headquartered in Bedfordshire and operating from more than 70 locations.

It has further operations in 15 countries including North America and Australia, as well as throughout continental Europe and the Asia Pacific region.

End of the road for UK giant

BUILT up through a series of aggressive acquisitions during the 1970s and 1980s, Hanson became one of the UK's largest and most powerful firms, worth more than 11 billion in its heyday.

However, during the last decade, the company broke itself up to focus on its buildings materials business.

Hanson was created in 1964 by Lord (James) Hanson and Lord (George) White, who quickly built up the group's assets including chemical factories in the United States, electricity suppliers in the UK and gold mines in Australia. Hanson is run by chief executive Alan Murray, who joined the firm in 1988 and stuck with the firm's core business when it split in 1996. Mike Welton, the former chief executive of Balfour Beatty, was appointed as the company's chairman in 2005. Lord Hanson died in November 2004, aged 82.

The height of their success came with the takeover of Imperial Group in 1986, which boasted assets including tobacco, the Courage Brewery, hotels and Golden Wonder crisps.

The deal was biggest takeover ever seen in the UK at that time, and Hanson was quick to strip down the company and divest off the non-core assets to leave them with the highly profitable tobacco business.

The Hanson empire was diverse, responsible for a range of products from cigarettes and batteries, timber and toys, golf clubs and Jacuzzis, to cod liver oil capsules and cranes.

However, following a failed attempt to take control of ICI and the death of Lord White, Hanson made the decision to split up the company in 1996 to focus on its core buildings material business.

Its demerged divisions went on to become the major listed companies Imperial Tobacco, Energy Group, and US-based Millennium Chemicals.