By Arno Schuetze and Francesca Landini
FRANKFURT/MILAN (Reuters) - German cement maker HeidelbergCement (DE:HEIG) has agreed to buy a 45 percent stake in Italian rival Italcementi (MI:ITAI) for around 1.67 billion euros ($1.85 billion) in cash and shares, as consolidation in the sector picks up, it said on Tuesday.
The stake is being sold by Italmobiliare, Italcementi's top shareholder.
The purchase price amounts to 10.60 euros a share, and will be partly paid by issuing at least 7.75 million new shares, plus financing from a bridge loan of 4.4 billion euros, HeidelbergCement said.
Following the closing of the stake buy, HeidelbergCement will make a mandatory public offer to all the remaining Italcementi shareholders at a price expected to be equal to 10.60 euros a share.
The deal comes after the merger of Holcim and Lafarge (PARIS:LAFP) to create the world's biggest cement maker, LafargeHolcim, (VX:LHN) with $44 billion in annual sales.
That compares with HeidelbergCement's 12.6 billion euros in sales and Italcementi's 4.16 billion last year.
HeidelbergCement, which has been reducing its debt, had said just last month that it would return more cash to shareholders and be disciplined about acquisitions.
Loss-making Italcementi, which is controlled by Italy's Pesenti family, has a market capitalisation of 2.3 billion euros, against 13.3 billion euros of Heidelbercement.
The 151 year old Italian company, which is present in more than 20 countries and is market leader in Egypt, has gone through a heavy restructuring and after years of losses analysts expect it to return to a net profit this year.
With an annual production capacity of more than 60 million tons and 46 cement plants, Italcementi is the world's fifth largest cement producer, according to its website.
($1 = 0.9051 euros)