LONDON (ShareCast) - The massive merger announcement from Holcim and Lafarge may have an unexpected beneficiary – in the form of Breedon Aggregates. The competition authorities in the UK are expected to approve the merger between those two European rivals, while at the same forcing them to let go of some assets. One possible unit that might come free is a cement works in Staffordshire. Breedon is a consolidator, snapping up assets on the cheap. The purchase of that unit would give the company its first entry into cement, allowing it to produce the full range of building materials, The Times Tempus writes.

Other units might also break free, too. Simultaneously, the British outfit stands to gain from the disruption which the deal might create for its rivals’ operations in the UK. The reaction in the stock’s price has been muted, perhaps due to the fact that they are trading at a sky-high multiple, “but, as I have suggested before, this is one for the patient investor”, Tempus adds.

The growth story in Cranswick is intact and the company is set to benefit from several positive ‘one-offs’. Thus, the firm should be able to continue to grow sales at about a 10% clip per year. This is thanks to the solid growth forecast for the public’s appetite for pork and pork products, its move towards higher-margin segments, growing exports and expanding sales in other categories.
In parallel, pig prices have come off since last summer, helping its margins, given that they are a critical input for its products. The mild winter and a Russian embargo on exports of pigs also helped to keep a lid on costs. At 15 times’ earnings, however, that looks like a full price, Tempus said.

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