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Italcementi set to announce reorganization

Italcementi, the world's fifth-largest cement maker, is likely to announce a long-awaited reorganization and analysts expect a deal that could place a premium of around 40% on the value of its Paris-listed unit Ciments Francais.

Italy's Italcementi, its controlling shareholder Italmobiliare and Ciments Francais said in a joint statement their boards would meet to evaluate guidelines for a corporate reorganization.

Their shares have all been suspended from trading for the whole day pending a statement, which they said would be released on Monday evening.

The market has long speculated on a possible reorganization of the group's complex control chain, which a year ago attracted criticism from British fund manager Hermes. Italmobiliare owns more than 60% of Italcementi, which in turns owns more than 80% of Ciments Francais.

Italcementi has both ordinary and savings shares in issue.

In an April 2008 conference call, Carlo Pesenti, Italcementi's chief executive and member of the group's controlling family, the Pesentis, said “sooner or later” Italcementi would buy out Ciments Francais.

Three analysts said the reorganization would be most likely to affect Italcementi and Ciments Francais and perhaps leave out Italmobiliare, the family-owned holding company.

They said possible options for combining the two operating companies include Italcementi offering cash to buy out Ciments Francais minority shareholders or a paper merger between them.

“We are hearing from local brokers a cash deal is expected, although some are not ruling out a mix of stock and cash,” a London-based analyst who follows Ciments Francais said.

“We are seeing estimates of a deal for minorities at between €80-€100 per share,” he said, asking not to be named.

A Milan-based analyst said he “would bet” on a paper merger between Italcementi and Ciments Francais, adding a reasonable valuation for Ciment Francais could be of around €90.

Ciments Francais shares closed at nearly €63 on Friday. The company, which is Italcementi's sub-holding for activities outside Italy, has a market capitalization of about €2.4 billion ($3.0 billion), according to the company's website. (Reuters)