Andrew Wilson

FRENCH building materials giant Lafarge is believed to be close to making a #3.3bn takeover bid

for Blue Circle Industries, Britain's biggest cement producer.

It is possible that the move could come today, according to weekend press reports.

There has been increasing pressure on Blue Circle during the past year as its heavy investments in the Far East turned sour as the economies of Malaysia and

Singapore deteriorated.

It has spent nearly #1bn on strategic expansion in what it saw as these rapidly growing countries as well as in the Philippines where the downturn has not been so marked.

On Friday, Blue Circle shares closed 29.25p ahead at 343.25p for a #2.67bn market capitalisation.

Last October, chief executive Ray Haythornthwaite was forced to issue a profits warning and said that the outcome for 1999 would be around #260m rather than the widespread City projections of #300m. He noted that poor trading in Chile was an additional adverse factor.

However, earlier this month, sentiment was helped by his saying that the profitability

would be slightly above that indicated and that Blue Circle had regained market dominance in Malaysia through aggressive price competition.

The company has also invested heavily in Greece through the #388m purchase of Heracles Cement encouraged by the construction prospects for that country.

Most recently, it bought a controlling interest in Egypt's Alexandria Cement in a #107m deal and is intent on further such transactions. Altogether, including disposals, Blue Circle has been involved in 19 deals in 30 months, mostly under former chief executive Keith Orrell Jones who now chairs Smiths Industries.

Lafarge has long been thought of as the most likely bidder for Blue Circle.

At the end of 1997, it took over the Redland building materials group after a #1.8m tussle that gave Lafarge the ownership

of the aggregates superquarry development in Harris which has been the subject of a prolonged and acrimonious public inquiry with First Minster Donald Dewar still to give his decision as to whether it should proceed.

However, Lafarge has not yet approached Blue Circle to see whether it is prepared to entertain talks.

But analysts believe the timing could be opportune as the British company has shed itself of all its non-cement activities with the

last significant disposals being its heating and bathrooms divisions.