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Brick firms plan merger

Job losses likely as Ambion and Chelwood announce decision to create brick giant by pooling resources

JOBS may be lost at two UK brick makers as they go ahead with plans to merge.

Ambion and Chelwood have announced plans to consolidate the manufacturing sector by merging to create one 'super-producer'.

The two manufacturers will form a single company with a turnover of more than £60 million in an effort to compete with giants Hanson and Ibstock.

The new company is expected to be in place by the beginning of the new financial year in April following clearance from regulatory bodies.They will trade under the existing names until then.

Discussions about the merger have been going on for as long as three years and finally concluded with a 50:50 equity deal between Chelwood's shareholder Cinven, and Ambion's shareholder Royal Bank Private Equity.

Cheshire-based Chelwood and former rival Ambion claimed the decision was taken to improve competitivenessby giving clients greater product choice and better customer service.

'Our presence will be over a wider geographical area which will benefit customers, 'said a spokesman.

Job losses following the merger have not been ruled out according to the spokesman, but Chris Attrill, chief executive officer of the new venture, thought there were few areas of competition between the two companies.

'There is little product or territory overlap and we will be able to offer a better balanced, more robust product offering than each business in isolation, ' he said.

One brickwork contractor in South Yorkshire was worried the merger might enable the organisation to push up prices. But this was refuted by the company.

'If anything it will enable us to compete more effectively with other manufacturers, ' said the spokesman.

Carl Kockelbergh, secretary of the Chartered Institute of Purchasing and Supply construction committee agreed the move could improve competition but warned of the danger of the new venture becoming a target itself.

'If the merger is strong enough to resist interest from larger producers it will be good for the sector, ' he said.