Hanson, Saint-gobain Hurt By U.s. Asbestos Upset, Dresdner Says

Hanson, Saint-Gobain Hurt by U.S. Asbestos Upset, Dresdner Says

by Bloomberg

15th February 2006

Hanson Plc, the world's biggest supplier of sand and gravel for building, may be a less attractive takeover prospect after the U.S. Senate blocked a
proposed $140 billion fund for asbestos victims, said Dresdner Kleinwort Wasserstein. Cie. de Saint-Gobain SA may also suffer.

The fund was blocked yesterday amid concern that the company-financed plan would cost taxpayers billions of dollars. The measure was intended to end asbestos lawsuits that have forced almost 80 businesses into bankruptcy, among them USG Corp., the world's largest wallboard maker.

``We remain unconvinced that an acquirer would be interested in buying/merging with Hanson, unless the asbestos liabilities were capped in law,'' London-based Dresdner analyst Darren Shaw wrote in a note. ``We continue to believe that the probability of asbestos reform becoming law in 2006 is extremely thin.''

The purchase of Aggregate Industries Plc by Holcim Ltd. of Switzerland last year demonstrates the likely appeal of Hanson to takeover, according to Shaw. The London-based company set aside $488 million to cover asbestos liabilities relating to Kaiser Cement Corp., bought in 1988, and Beazer Plc, acquired in 1991.

Shares of Hanson, whose U.S. asbestos claims are `its elephant in the room,'' according to Teather & Greenwood analyst David Taylor, slipped as much as 8.5 pence, or 1.2 percent, to 678 pence and traded at 683.5 pence as of 4:26 p.m. in London. Saint-Gobain, Europe's biggest distributor of building materials changed hands at 55.4 euros in Paris, down 1.3 percent.

The impact of yesterday's Senate failure is negative for both stocks, Shaw wrote in the note. Saint-Gobain, based near Paris, had 100,000 pending asbestos claims as of Dec. 31. Respiratory Illness

Asbestos, a heat-resistant material used in insulation, auto parts and construction products since the early 1900s, can cause respiratory illness and has been linked to a rare and particularly lethal form of cancer that can surface years after exposure.

Supporters of the fund yesterday fell one vote short of the required 60 votes to waive a budget rule barring legislation that increases government spending by $5 billion in any of four decades after 2016. Senate Majority Leader Bill Frist held out a slim hope that the measure might be revived because of the absence of one senator, Democrat Daniel Inouye of Hawaii.

``It is probably fair to assume that there are Senators who voted for last night's procedural vote who want further discussion but are ultimately against the bill,'' Shaw wrote.