Lafarge SA, the world's largest cement maker, said Monday it is buying Egypt's Orascom Construction Industries Cement group, the leading player in the Middle East and Mediterranean basin, for $12.89 billion.
The purchase will boost Lafarge's access to the fast growth offered by emerging market economies. It joins a growing number of French companies expanding in North Africa.
In a statement Monday, Lafarge said it expects the majority of its profits to come from emerging markets by 2010.
The deal values Orascom Cement at $12.89 billion, with an assumption of $2.05 billion in net debt, Lafarge said.
The deal will be financed through $8.79 billion of debt and $4.1 billion from issuing 22.5 million new Lafarge shares at $183.11 per share.
Orascom shareholder Nassef Sawiris will obtain an 11.4 percent stake in Lafarge, the company said, which he has agreed to hold for four years.
Lafarge said it expects the deal to unlock synergies of more than $219.74 million a year and boost earnings per share from the first year.
In a conference call, Lafarge's Chief Executive Bruno Lafont said the deal is expected to be positive for earnings as soon as 2008.