Anglo gets thumbs up on its intention to sell its stake in Lafarge Tarmac

Moody’s Investors Service on Tuesday said that Anglo American’s (AGL) intention to sell its 50% stake in Lafarge Tarmac to Lafarge would be “credit positive for both issuers”.

Moody’s Investors Service on Tuesday said that Anglo American’s (AGL) intention to sell its 50% stake in Lafarge Tarmac to Lafarge would be “credit positive for both issuers”.

Anglo will sell its share for a minimum of £885m (R16.4bn).

“The sale‚ which remains subject to a number of conditions precedent in particular‚ is positive for Anglo American because the company has announced it will use the cash proceeds to reduce debt‚” said Moody’s.

The deal is subject to conditions relating to the Lafarge-Holcim merger. These include the proviso that Lafarge Tarmac be deemed “an acceptable divestment remedy by the regulators”.

Earlier this year‚ Swiss-based building materials and aggregates company Holcim and French industrial company Lafarge announced that they would pursue a merger. The tie-up would create the world’s largest cement company.

Holcim and Lafarge need to shed a number of assets to help persuade competition authorities to approve the proposed deal. They have said they expect the merger to be completed in the first half of next year.

“The announced agreement relating to the 50% stake of Anglo in Lafarge Tarmac is therefore a positive step in the context of the Lafarge-Holcim merger process and also removes uncertainty with reference to the exit of Anglo from a marginal noncore business‚” said Moody’s.

Anglo American said it and Lafarge “will work towards finalising the terms of a definitive agreement in the third quarter of 2014”.