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No hurry to sell Redland bricks arm

THE LIST of companies keen to buy Redlands clay brick business is said to be short but serious, according to industry experts.

Redlands corporate finance director, Paul Hewitt, confirmed that the company has had preliminary discussions with a number of interested parties, but he said that no decision is imminent.

Foremost among the bidders is Boral, the Australian-owned company whose UK subsidiary makes concrete bricks, and Austrian brick maker Weinerberger.

According to Mr Hewitt, the plan is to sell off the brick business if the price is right, while at the same time restructuring and reinforcing its roof tile operation, for which more long-term potential is seen.

Although the UK building recession has contributed to a glut in the domestic brick market, Mr Hewitt claimed the wider European brick market remains buoyant.

He said the rationale for the sale would simply be that other companies could make more money out of it than we do.

Sandy Arbuthnott, managing director of Boral, confirmed an interest, saying a successful acquisition would cement its European ambitions. Boral has a strong presence in Holland and Germany but has so far been frustrated in its attempts to develop a clay brick business in the UK.

Although a cash sale would be acceptable to Redland, Mr Hewitt said the company is also open to a cash-plus-asset swap. Lawrence Amboldt, construction analyst at MeesPierson, said Redlands motives for selling off its brick business were primarily financial. 'It just does not have the funds to try and become market leader in this sector,' he said.

Mr Amboldt said that Hanson sent a clear message to the market when it bought Belgian brick producer Desimpel Kortemark two weeks ago. 'Hanson sees that competition in this market is now increasingly on a pan-European, not merely national, scale,' he said.

The relatively high price that Hanson paid indicates a hardening of competition, and may up the ante on the Redland sale.

With Hanson inevitably barred from bidding by the UKs monopoly laws, selling its brick interests to Weinerberger would suit Redland, because the two companies already share an interest in Central European tile producer Bramac.

Bramac is jointly owned by Weinerberger and Europes largest tile manufacturer, Braas, of which Redland owns a 50.8 per cent share.