Lafarge, Saint-Gobain to sell $3.8 bn in shares

Lafarge SA, the world’s biggest cement producer, and building-materials supplier Cie de Saint- Gobain SA plan to sell ¤3 billion ($3.8 billion) in shares to shore up finances eroded by slowing construction markets.

Saint-Gobain investors will be offered ¤1.5 billion of stock at ¤14 apiece, the supplier of glass and concrete products said today. That’s 50 per cent less than Thursday’s closing price of ¤27.99 . Lafarge, yet to announce terms, said its two largest shareholders, Groupe Bruxelles Lambert and NNS Holding, back the plan. The rights offerings highlight a deepening building slump at a time when the companies have spent more than $25 billion combined on acquisitions to expand globally. Saint-Gobain, based near Paris, said 2009 will be “extremely challenging” following a sharp deterioration in demand in the fourth quarter. The company cut 8,000 jobs last year, twice as many as planned.

“It’s natural that they try to build up their capital,” said Jacques-Antoine Bretteil, who manages about $312 million at International Capital Gestion in Paris. “Both these companies have taken good steps to deal with the situation.”

Saint-Gobain, offering two new shares for every seven owned, dropped 13 per cent to 24.18 euros in Paris as of 10.03 am. Lafarge was little changed at ¤36.41. Its nearest rival, Holcim Ltd of Switzerland, fell 4.2 per cent.

“The market doesn’t understand why Saint-Gobain is doing such a large-scale capital increase at this stage,” Chicuong Dang, an analyst at KBL Richelieu Gestion, which oversees $5 billion in Paris, said in a television interview.