Cement maker Lafarge has recently announced that it had agreed to buy Orascom Cement, a unit of Egypt's Orascom Construction Industries, for EUR 8.8 billion, in a deal that would boost its earnings and exposure to high growth emerging markets.

The deal will see Orascom Construction Industries' shareholder Mr Nassef Sawiris take an 11.4% stake in Lafarge and have a seat on Lafarge's board.

Lafarge said that as part of the acquisition, it would take on EUR 1.4 billion of debt. It will finance the acquisition with EUR 6 billion of debt and by raising EUR 2.8 billion in equity. It added that the buying of Orascom Cement would give it a leading position in the Middle East and Mediterranean basin region.

Mr Bruno Lafont chairman & CEO of Lafarge said that "This acquisition of a leading Egyptian group is a decisive opportunity to accelerate our profitable growth strategy in cement in emerging markets." As a result of the transaction, 65% of Lafarge's EBITDA is expected to be generated in emerging markets in 2010, relative to 45% in 2007."

Lafarge also raised its financial targets as a result of this acquisition. Lafarge said that it was expecting net earnings per share of more than EUR 15 in 2010 and free cash flow of more than EUR 3.5 billion in 2010. The deal is expected to be completed at the end of the first quarter of 2008.