Tarmac in £2bn merger with Lafarge

Historic concrete business Tarmac is being merged in a deal worth more than £2 billion, it was announced today.

The move creates uncertainty for 500 people who work at the company's base in Wolverhampton. The company is merging with the UK arm of French quarrying giant Lafarge.

No decision has been taken about where the new business will be based, raising fears for the future of Tarmac's base in Millfields Road, Ettingshall.

Tarmac, which has assets of £1.6bn, is the senior partner in the merger.

Lafarge's cement business is based at Portland House in Solihull, while its aggregates and concrete arm is at Syston in Leicestershire.

Tarmac's owner, mining group Anglo-American, bought the Wolverhampton business shortly after it split from its construction arm Carillion in 1999.

Today it moved quickly to quell fears that the merger will mean major redundancies among the 7,300 staff at the two companies, although staff could be transferred if plants close.

Predicted savings of £60 million a year would come from merging operations and increased sales, rather than cuts, the company said.

Today's surprise announcement comes after Anglo-American has spent years trying to find a buyer for the Tarmac business.

Anglo chief executive Cynthia Carroll said today: "This transaction positions us well to maximise value."

Under the deal, a single business will be created jointly owned by Anglo American and Lafarge's French parent company.

Combined sales of the businesses were around £1.8bn last year, with profits of about £210m.

Tarmac is the UK's largest quarrying company and has been involved in some of the UK's biggest construction projects including Wembley Stadium and the M1 widening.