CRH races Blackstone for Holcim, Lafarge assets -sources

By Arno Schuetze and Freya Berry

FRANKFURT/LONDON, Jan 22 (Reuters) - Irish cement maker CRH and a consortium led by Blackstone (NYSE: BX - news) will battle for the assets which Lafarge (Paris: FR0000120537 - news) and Holcim (Other OTC: HCMLF - news) must sell ahead of their planned merger, several people familiar with the matter said.

One source said that CRH (NYSE: CRH - news) was seen as the front runner having tabled the highest offer for the assets with a bid of 6 billion euros ($6.9 billion), although it is still too close to call who might win.

The Blackstone consortium, which also includes Cinven and Canadian pension fund CPP, has bid 5.5 billion euros, a second source said.

A third source said other competing bidders, including a consortium comprising private equity firm CVC (Taiwan OTC: 4744.TWO - news) , and sovereign wealth funds the Abu Dhabi Investment Authority (ADIA) and Singapore's GIC, were still doing final due diligence on the assets and could still make tweaks to their offers.

"The sellers have not yet picked one bidder for exclusive talks," one of the people said, adding that such a step may be taken within the next couple of days.

The sources spoke on condition of anonymity because the process is private.

Bankers said the Blackstone consortium is lining up a debt financing of up to 4.5 billion euros, equating to around 5.5 times EBITDA of approximately 725-730 million euros, including undrawn debt.

They said cash-rich institutional investors, who have a preference for event-driven financing, have a strong appetite for the deal.

France's Lafarge and Swiss peer Holcim announced merger plans last year, hoping to cut costs and cope better with overcapacity and weak demand. The new company will be the world's biggest cement maker with $44 billion in annual sales.

The companies initially received more than 60 tentative bids from industry interests and private equity firms for the assets, which they must sell before completing the merger.

But a large number of bidders, such as buyout group KKR , Italy's Italcementi (Milan: IT.MI - news) or Turkey's Sabanci , only showed interest in some of the assets, the sources said.

They added that Holcim and Lafarge preferred to offload the complete bundle in one go to avoid the risk of being left with unattractive parts.

Lafarge, Holcim, CRH, Cinven, CPP and CVC declined to comment. ADIA and GIC were not immediately available for comment.

($1 = 0.8595 euros)

($1 = 0.8724 Euros) (Additional reporting by Claire Ruckin at IFR; Editing by Sam Wilkin)