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Major groups on alert as buyers sought for Castle Cement and Keyline Dual sale intensifies materials shake-up

THE RESTRUCTURING under way in the building materials sector gathered pace last week as it emerged that UK materials groups Castle Cement and Keyline are for sale.

Ownership of Castle Cement is set to change after a European Commission investigation recommended that its Scandinavian parent company, Scancem, be broken up on grounds of market domination. Scancem's two majority shareholders, Swedish contractor Skanska and Norwegian group Aker, will sell their stakes.

Major European materials groups, including RMC and Lafarge - Redland's French parent company - are reported to be looking at parts or all of Scancem.

In a separate move, the major quoted builders' merchants groups are expected to be planning bids for Keyline. The UK's fifth largest builders' merchants chain was put up for sale by its Irish parent group, CRH, last week.

Analysts expect Keyline, which has 101 branches and 1,800 staff, to raise £180-200 million. Meyer International, Travis Perkins and Graham Group are expected to be among the bidders.

Myles Lee, CRH's general manager of finance, said: 'I'm sure there will be a good number of enquiries.'

The sale follows CRH's recent acquisition of a majority stake in brick producer Ibstock and reinforces the trend for large materials groups to focus on specific sectors.

Keyline is CRH's only retailing business, but its potential in the UK is thought to be limited after the Irish group failed to win control of Hall & Co, the merchants chain RMC sold to Wolseley last year.

Castle Cement is the UK's second largest cement company with about 25 per cent of the market. Any change in ownership will be keenly watched by competitors, which may fear encroachment by Continental groups.