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Hanson Directors to Approve Merger with Heidelberg Cement

HeidelbergCement AG, headquartered in Heidelberg/Germany, has reached agreement with the board of directors of Hanson PLC on the terms of an acquisition of the entire issued and to be issued share capital of Hanson at a price of 1100 pence in cash for each Hanson Share, valuing Hanson at approximately £8.0 billion. The board of directors of Hanson intends to recommend Hanson shareholders to accept the offer.

HeidelbergCement is one of the leading producers of building materials worldwide, with its core products being cement, ready-mixed concrete and concrete products, aggregates, building materials and related activities. The HeidelbergCement Group employs around 46,000 people in more than 50 countries and generated revenues in excess of €9 billion in 2006. North American operations have a leading role in the revenue of the HeidelbergCement Group, with additional imports from other regions to meet demand. HeidelbergCement has market leading positions in cement across Europe and Central Asia. It is also active in building materials markets in India, China, Indonesia and Africa.

Hanson is one of the world’s largest suppliers of heavy building materials to the construction industry, with turnover in 2006 of £4.1 billion. Its products fall into two categories: “aggregates” (crushed rock, sand and gravel, ready-mixed concrete, asphalt, and cement related products) and “building products” (concrete pipes, pre-cast products, concrete pavers, blocks, tiles and clay bricks). Hanson employs approximately 26,000 people, operating primarily in North America, the UK and Australia with further operations in Asia Pacific and Continental Europe.

The combined group would be the second largest in its industry, on a worldwide basis, by proforma market capitalisation. The combination of HeidelbergCement and Hanson is strategically compelling, creating a strong, market leading, global building materials group, benefiting from:

leading worldwide positions in key product areas, including being the largest producer of aggregates, the second largest producer of ready-mixed concrete, and the fourth largest producer of cement;
combined proforma revenues of approximately €15 billion and over 70,000 employees;
diversification across products and geographies;
increased vertical integration in many markets around the world; and strong building products businesses, particularly in North America and the UK.

The price of 1100 pence per Hanson Share represents a premium of approximately 34 per cent. to the average closing mid-market price of 820 pence per Hanson Share for the three months ended 2 May 2007; and a premium of approximately 29 per cent. to the closing mid-market price of 852 pence per Hanson Share on 2 May 2007.

The Acquisition will be made by Lehigh, a wholly-owned direct subsidiary of HeidelbergCement, and is proposed to be implemented by way of a scheme of arrangement under section 425 of the Companies Act 1985. The scheme will be conditional upon the requisite approval of Hanson’s shareholders and the English Courts. The acquisition will also be conditional upon the satisfaction or waiver of European, Canadian and US competition authority clearance. HeidelbergCement currently anticipates that the transaction will be completed in the third quarter of 2007.

The funds required for the acquisition will initially be provided under a new credit facility entered into with Deutsche Bank and The Royal Bank of Scotland. The credit facility will be partly refinanced through a combination of hybrid capital in an amount of up to €2 billion, the issue of bonds and the divestments of non-core business activities. It is HeidelbergCement’s intention to maintain an investment grade rating for the enlarged group, and to support its objective it intends, in addition to raising the funds required to finance the Acquisition, to undertake a capital increase in an amount of approximately €500 million.

Commenting on today’s announcement, Dr. Bernd Scheifele, CEO of HeidelbergCement, said:
“We are delighted that Hanson has agreed to recommend our proposed offer. It is a defining moment for HeidelbergCement and its shareholders, and is consistent with our focus on strategic expansion into complementary geographies, across diversified products and customer markets. HeidelbergCement and Hanson are a perfect fit for each other, sharing the same enthusiasm for operational efficiency and focus on adding long-term value; reflecting the exceptional dedication and capability of their respective employees and management teams. We believe that the combined business will be better able to respond to the evolving needs of its customers in the competitive and rapidly consolidating global building products industry. We are also pleased to announce that we have asked Alan Murray, CEO of Hanson, to join the top management of HeidelbergCement. His ongoing role is likely to include responsibility for the US and Australian operations.”

Executive Mike Welton, Chairman of Hanson, said:
“The cash offer of 1100 pence per share is more than 12 times Hanson’s EBITDA for 2006 and represents very good value for Hanson Shareholders. Hanson and HeidelbergCement are highly complementary businesses and together will become one of the world’s leading building materials suppliers. I believe the combined group will provide excellent opportunities for many of Hanson’s people around the world.”

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