REDLAND CASE

PART ONE

THE RISE OF REDLAND

This is the story of a company that was founded just after the Great War. Up to, and through the Second World War, the company grew steadily but modestly, serving the construction materials markets in the South of England. After the war, it invented a clever machine that made concrete roof tiles faster and better than its competitors. This invention coincided with the post-war reconstruction period in Britain and Europe. The roof tile machine attracted great interest in many parts of the world and the company entered into partnerships with foreign companies that wanted the machine and its associated technology.

The company found two levers which accelerated its growth, partnerships, in which it acted as a shareholder, and acquisitions, which although numerous, were modest in size - at first. By these means, the company grew into a 'large small' enterprise. New management, arriving in the 1970's, brought a high level of financial skill and growing ambition. The company, spurred by the run-away success of one of its partnerships, and supported by a positive army of City advisers, launched into a programme of larger and larger acquisitions, until, by 1992, it moved up into the top 50 largest British businesses. Then........

(Before continuing, readers are invited to pause for a few moments and try to think what might have happened to this company next. If you like, write your conclusions in one or two sentences on a sheet of paper, put it in a safe place and read on.)

Redland was founded in 1919, in Reigate, Surrey. The geology of the surrounding Downs and Weald ensured a plentiful supply of sand for the manufacture of concrete roof tiles, which was Redland's original business. Between the two world wars the company was solid, but unspectacular. Redland essentially extracted raw materials from the ground and converted them into roofing materials and bricks or sold them as aggregates.

By way of making a start, it is worth spending a few moments on the three building materials sectors that formed the backbone of Redland's portfolio, as many consider them to be basic and simple.

The first and "heritage" business was the manufacture and sale of roof tiles. Traditionally, mainly local companies had made roof tiles out of clay. Redland pioneered the manufacture of tiles in concrete, to a far superior standard than traditional clay tiles and on an industrial scale.

Redland's breakthrough was a tile-making machine of considerable ingenuity, which eventually became capable of producing tiles at speeds in excess of 110 per minute.

Roof tiles are heavy and relatively inexpensive in relation to their weight, so it is not viable to transport them great distances. As a result the business is regional in nature with quite different aesthetic and design differences between countries.

For Redland, universal features were tile technical design, research into coatings and colours (tiles are supposed to last up to 50 years on a roof, from the tropics to the arctic), and the tile -making machine. The unique know-how, in production and materials technology, coatings and technical design, were best centralised while design, production and sales were carried out locally.

Next came the aggregates business. A very basic business, said many City analysts, expressing sentiments later echoed by some Redland top managers; simply extract material from the ground and sell it. Closer examination reveals a much more complex structure, more akin to an oil business.

First, there are many different forms of "upstream" raw materials, from sand and gravel, through hard rock, to rather more exotic materials like china clay and limestone dolomite. These can be exploited to produce a very wide variety of downstream products and services, ranging from cement and lime through to asphalt roadstone and civil engineering contracting.

Some materials, like sand and gravel, are very local, so decisions on pricing and customer relations are best made locally. Hard rock quarrying, from massive semi-automated mines, is quite different and commands a price that means the material can be transported over a long distance by rail and sea.

At the "product" end of the business the contrasts are considerable. Roadstone contracting and laying is the ultimate 'just-in-time' business, with fleets of trucks feeding hot asphalt straight into road laying machines. By comparison, lime production is a matter of running massive and hugely expensive kilns, on the same scale as iron blast furnaces.

Strategically, the acquisition and holding of reserves is fraught with economic and political complexities. Management needs to consider long - term economic forecasts and environmental factors. People are becoming increasingly sensitive about having a seven million ton a year granite quarry next door!

So, though many of the materials are basic, the commercial and logistical structure of the aggregates business can be complex.

Last came bricks. Surely nothing could be simpler? Well, not entirely. Whilst one brick tends to look like another, closer examination will reveal that there are subtle differences in the substance and appearance. One industry insider maintained that there were two kinds of brick-boring bricks and sexy bricks. Needless to say, sexy bricks, which had certain appealing aesthetic characteristics, sold at several times the price of the more basic variety.

Unfortunately, bricks are manufactured from local raw material, clay, which has different characteristics in different areas. Given the subtle differences in the natural raw material, it is extremely difficult to produce a standard product all over. Otherwise, everybody would have produced sexy bricks!

Materials scientists have laboured mightily on the science and art of mixing raw materials to produce a predictable, universal brick, with little reliable success.

Bricks are produced in massive kilns, which in themselves are technically very complex and expensive. So much so, that they become grossly uneconomic if not fully utilised.

Given that, unlike roofing, there is no "re-walling" market, the brick industry, with its economically inflexible production facilities, is massively sensitive to economic cycles.

These then, were Redland's core businesses, which for some reason became labelled as simple and even boring by many in the press and City. This feeling that running such businesses was rather dull was to have very significant effect on later events.

After the Second World War, reconstruction, the post-war population boom and a marked rise in the aspirations of people for a better physical environment came together to create huge market opportunities for companies in the construction and construction materials industries. By the early 1950's, Redland was very well placed to take advantage of the benign environment for growth.

Amongst its then directors were Col. Alexander Frederick Farquhar Young, who was Chairman, George Harold Carter, Anthony Phillips White and by the mid - 1950's, Terence Weymouth Dawson.

Young was a Chartered Accountant and bachelor. Those who worked for the company in those days described him as shy, but dedicated to his work. Carter was an engineer and his small engineering company had brought the ground breaking tile machine to Redland. White was a Chartered Accountant and Dawson was another financial man, described as a dedicated deal-maker.

During this period, the patterns that were to shape much of the company's future were established.

Carter, Wilkinson Engineering, now a Redland subsidiary, began to produce roof tile machines i n some numbers and the moulds for the tiles were also produced in the company's own foundry. The technical and visual qualities of tiles produced with these machines enabled Redland to develop a leadership position in the UK market.

The Redland machine came to the notice of Rudolph Braas, whose tile making company in Germany was also faced with massive post-war opportunities. Rather than selling the machine, Redland licensed it to Braas in return for a minority shareholding in his company. Shortly afterwards, Redland persuaded the War Reparations Commission to part with its shares in Braas, thus establishing a majority holding.

Two pieces of the evolving jigsaw were established at this time.

First, Redland took a 'partnership' position in a foreign country, where the partner had full responsibility for competing in the market and running the business, and Redland supplied technology and acted as a shareholder.

Second, it is reported that Herr Braas was less than pleased by what he saw as Redland's sha rp practise with the Commission. From there on relations between Redland and this important partner were tinged with a degree of caution on the part of the Germans. Over the years, this caution became enshrined in a massive legal agreement, which covered e very aspect of the relationship with true Teutonic thoroughness.

During 1956 Redland sold its interest in a partly owned Australian subsidiary to the joint venture partner in exchange for a stake in the acquirer. Once again management responsibility was e xchanged for shareholding.

Colonel Young explained this transaction in the 1956 annual report, "....the effect of this share exchange is greatly to diversify our interests in Australia instead of confining them to roofing tiles only, and also gives us a marketable investment in Australia which we can reduce or increase in the future, as the best interests of the company may determine. It will also obviate for some time to come the necessity for the frequent visits to Australia which I have had to make for the last eight years. Although these journeys have had to be made in a great hurry and are always tiring, I regard their cessation with mixed feelings as I have made many good friends in Australia, but control at a long distance could never be satisfactory".

A casual observer might be forgiven for thinking that Col. Young, just for a moment, sounded more like a shareholder than an industrial manager!

Over time, this pattern of relationship with businesses outside the UK became the norm, to the point tha t even in the 1990's some Redland managers were describing the group to their wholly owned non-UK colleagues as "The Shareholder".

In the 1950's Redland's ambition increased. Col. Young, again in the 1956 Annual Report: "We are confident of our ability to hold the outstanding position we have won in the building and pipe trades, and shall neglect no opportunity to expand still further our engineering and overseas interests. Conservation and creation is our aim - of all business follies the greatest is stagnation".

This ambitious streak drove a plethora of acquisitions, nearly all of which were in heavy-side construction materials. So, by 1961/2, Redland was in roofing tiles, bricks, concrete and stone pipes, sand and gravel, hard stone aggregates and road contracting.

In later years Redland was to diversify significantly into a wide variety of other activities, but always returned to its origins in roofing, aggregates and bricks, a little like a prodigal coming home after a bender.

By 1968, Col. Young was able to report that: "Due to the considerable success that we have achieved in growth by acquisition and merger - 23 successful bids against three failures or withdrawls over the last 13 years is not a bad record -the name of Redland is constantly linked in the press with other companies which are thought to be suitable for takeover or merger....".

He goes on to say: "Mergers and takeovers and are by no means the only method of maintaining growth and increasing efficiency, and one of the principal tasks of the new Management Board is to subject every aspect of the group's activities to a searching analysis, with a view to reconstruction or disposal if the required return on capital cannot be achieved".

So, two more patterns begin to emerge-the notion of acquisitions as a major engine of growth, and the belief that businesses were assets that could be easily disposed of if they did not produce satisfactory returns.

While Redland was busying itself with a plethora of new partnerships and acquisitions, Rudolph Braas was growing a truly formidable business in Western Germany, by producing top quality products, developing close relationships with staff and customers and opening new plants, still using the Redland tile machine. The contrast between the underlying strategies of the two partners was marked. Braas concentrated on the quality of operations and processes in a home market that grew steadily. Redland, on the other hand, had to contend with a UK home market that was subjected to considerable uncertainty and volatility due to the swings in policy of successive governments, and a whole variety of British diseases. This made international expansion very attractive, and for Redland that meant more partnerships.

On another level, Braas had Redland as its majority shareholder, with a variety of private minority holdings. Redland had the UK stock market to contend with and its organization inevitably took the form of a holding company. The two entities therefore developed very differently, Braas becoming an operating company, whose management were very close to the business, especially in the crucial German market, and Redland as a financial holding with directly managed operations in the UK only.

By 1965, the Redland Group had advanced from a 1955 base of a turnover of £2.4 million and profit before tax of £318,000 to a turnover of nearly £38 million and profit before tax of £5.2 million. The scope of the company's activities had grown somewhat and now included builder's merchants in the portfolio. However, shortly afterwards it was decided to sell the merchanting business to an owner who had the expertise to understand it better, a sensible move, which apparently was not remembered for the future!

In Germany, Braas and Co. had another brilliant year under the inspiring leadership of Herr Rudolph Braas, with profits before tax exceeding those of the previous record year in 1963 by 40%.

More widely in Europe, a jointly owned roofing company was established with Braas, called Redland -Braas-Bredero, or RBB. Initially, Redland held 55% of RBB. Many years later, RBB was to reappear in a different guise.

The 1965 annual report welcomed Mr. Colin Corness as managing director of Redland Roof Tiles in the UK.

By 1966, profits before tax had grown to £5.3 million a nd acquisitional growth continued, this time in aggregates with the purchase of Inns and Co. European roofing expansion, in conjunction with Braas, continued with moves into France and Austria.

The period between 1966 and 1974 witnessed a kind of coming o f age for Redland. In 1967, Carter the engineering genius retired from executive duties and was not replaced. In 1968, Colin Corness was appointed as group managing director and in 1970 Col. Young retired as chairman, to be replaced by one of the heavyweights of his era, Lord Beeching.

Still the inexorable march of growth continued. Two major diversifications, into traffic engineering and waste management added considerably to the complexity of the group's businesses. This complexity was matched by the operating and holding structure of the company. In the UK, Redland now had 16 wholly owned operating subsidiaries. Internationally, two operations, both in traffic engineering, were wholly owned, whilst 20 subsidiaries and associated companies with holdings ranging from 9% to 55% covered interests in continental Europe, Australia and South Africa.

This period also saw a significant event that was to fundamentally influence thinking at Redland. A major industry rival, RMC, made a very unwelcome bid for the company.

Shareholders failed to support the bid, owing, it was felt, to a combination of past track record and the reputation of Lord Beeching in the City. Perhaps in those days shareholders were also more inclined to support incumbent managements.

Nevertheless, the bid was a warning that sensitised future management to the need to cultivate shareholders and have good City advisers.

Through the 1970's, a series of senior appointments were made, which established a pattern that was to endure for nearly three decades and have a hugely significant influence on the company's future.

Colin Corness, who was managing director, was described by all who knew him as very intellectually talented. He had a first-class education through the British public school system and had been very successful in his studies at Cambridge University.

Senior appointments from the mid-1970's onwards tended to follow a pattern, of relatively young, intellectually talented men educated at the universities of Oxford and Cambridge. Exceptions to this rule were primarily in the aggregates business, where top management tended to come from an industry background.

By 1979, Beeching had retired as chairman, to be replaced by Corness as chairman and chief executive. Anthony Hitchens, previously finance director, and David Lyon, had become joint managing directors. Both were graduates of "Oxbridge". This established another pattern, that of having joint managing directors.

Events in the business confirmed the ambitious nature of Redland 's management. A string of acquisitions in traffic management systems and traffic automation, wooden roof-truss and window systems culminated in the acquisition of what was described as a 'fourth leg' of the business, Cawoods, which was mainly involved in fuel distribution, but had some aggregates and other activities.

To facilitate this purchase, Redland Purle, a waste management business purchased around the time of the successful RMC bid defence and at that time seen as highly synergistic with the aggre gates business, was sold. The alliance with waste management had never been that comfortable. The industry was prone to bad publicity and was not felt to be compatible with Redland's increasing sensitivity about its reputation.

The Cawoods acquisition gives a small insight into the developing closeness between Redland's top management and the financial community.

The idea for the deal to acquire Cawoods was brought to Redland's attention by Barings, the company's investment bankers.

After the deal was completed, Corness was generous in praise of his advisers: "By good fortune of timing and following entirely independent evaluation of each company by the other as a desirable merger partner, we found ourselves brought together with Cawoods Holdings Limited upon the initiative of Baring Brothers & Co. Limited, who have for many years advised both companies.

"I would like to express to all my fellow employees my very real appreciation of their performance under these very difficult circumstances, and to add a special word of thanks to our professional advisers for their most competent handling of the complex Cawoods merger transaction".

Meriting less publicity than the "fourth leg", but of considerable significance, was the purchase of Mc Donough Brothers, a San Antonio, Texasbased aggregates company. Mc Donoughs was 80% owned by Redland and marked a new trend for Redland outside Britain, that of majority or wholly-owned companies.

It is worth pausing the onwards rush of Redland's growth to take stock of what was going on in 1983.

By this time, most of the individuals who had been the creators of the modern Redland had left and Lord Beeching had announced his intention of retiring from the board at the end of the financial year. Mr. Robin Leigh- Pemberton, who had joined the board as a non-executive director in 1972 resigned in 1982 to become governor of the Bank of England. Sir Derek Ezra, another heavyweight, joined the board in 1982.

Amongst the executive directors, the rate of change was brisk. Anthony Hitchings resigned to join Consolidated Goldfields, where he teamed up with Rudolph Agnew, later to feature in the Redland story. David Lyon became managing director and Robert Napier finance director. Tim Walker, who was 'in charge' of roofing businesses world wide, joined the board. Peter Jansen, another younger man, of Dutch extraction, had joined the board a little earlier, as had David Taylor, who was in charge of the aggregates business. Following the Cawoods acquisition, Edward Binks and Charles Neill of that company also became executive directors. At face value, this board seemed to have a sound mix of education and intellect, and industry experience and practical accomplishment.

The business had now become very substantial. Sales for 1982/3 broke the £1bn mark for the first time. Profitability was more of a problem, at £66.3 million, but much of the cause of this could be blamed on economic conditions. A recession in Germany had halted Brass's previously spectacular progress but by 1983 it looked as though strong growth was about to recommence.

The range of businesses had increased dramatically. Redland was now involved in aggregates, roofing, clay bricks, road marking and maintenance, reinforced plastic pipes, building claddings, fuel distribution, shipping, roof truss fabrication, traffic automation and plastic windows.

The legal and financial structure of the company had become vastly more sophisticated. Sixteen separate holding companies in the UK, Netherlands Antilles, Channel Islands, Netherlands and the United States evidenced another trend. The financial smartness that had emerged under Hitchens was to be further developed under Robert Napier as finance director.

The operating structure also had developed in size and complexity. There we re 20 separate operating subsidiaries and associates in the UK alone, with 16 in continental Europe, 6 in the United States, 3 in the Far East and 11 in the Middle East and South Africa.

Truly Redland had moved, in the words of Lord Beeching, from a large small company to a small large company. And the management were still ambitious and hungry for growth.

1987 was another momentous year. British Fuels Ltd was formed by Redland, British Coal and AAH. Redland's holding in the new joint venture was 55%. Some wondered if this was another example of Redland's interest in partnerships, or preparation for withdrawl from the fourth leg.

A second new alliance was with The US company, Koppers in the aggregates industry in Colorado and New Mexico.

Sir Colin Corness expressed great warmth for joint ventures in his report to shareholders, saying, "The spirit of partnership which has for so many years distinguished our operations overseas is never far from our minds when evaluating new opportunities. The principle and the practise of it have served us well".

Sir Colin goes on to say that the company's corporate strategy continues to favour concentrating resources in those product areas "Where we enjoy competitive advantage based upon our in-house R&D expertise, our process technologies and our market strengths, rather than engaging in opportunistic diversification into randomly unrelated fields". Indeed Redland watchers would have noticed the divestment of the Prismo road marking and the traffic automation businesses.

Warming to this theme of concentration, Sir Colin announced the acquisition of Genstar, a very large Maryland - based aggregates business.

Meanwhile, change continued apace in the top management. With an elegant turn of phrase, Sir Colin says, "There comes a time in the evolution of most businesses when it is necessary to re -shape the senior management structure to meet changing circumstances and to provide for future succession, as well as to create upward mobility. Such was judged to be the case towards the end of last year when David Lyon agreed to facilitate (by leaving the company) the promotion of Robert Napier and Tim Walker........ to the position of Managing Directors , with responsibility respectively for our international and UK operations".

The joint managing director configuration had reappeared, but only for a short time. In the 1988 report, Sir Colin announced, "Since my last chairman's statement , there have been several important changes on the board. Mr. Robert Napier was nominated Gro up Managing Director after a busy period (9 months? - authors) successfully managing our international operations. Mr. Gerald Corbett has been appointed Financial Director.(from Dixons, a retailer - authors). Mr Kevin Abbott, Mr Peter Johnson and Mr George Phillipson (respectively the managing directors of our UK roofing, brick and aggregates businesses) have also been appointed to the board. The new executive team under the leadership of Mr Napier, which has an average age of 40, is exceptionally well qualified to carry our business forward into the next century".

Indeed, at first glance, this was a team of all the talents. Now, the chairman and all of the Redland executive directors were graduates of the universities of Oxford and Cambridge, and most of them had had a distinguished academic career. However, only George Phillipson had deep industry experience.

Meanwhile Braas had staged a vigorous recovery from three very difficult years.

It is interesting to note the growth in the number of advisers retained by the company. In 1984, only Barings and Barclays plc were retained as investment bankers. By 1987, the list had grown to include Barclays, Barings, Morgan Grenfell, Morgan Guaranty Trust, Morgan Stanley, National Westminster plc and SG Warburg. Redland's corporate management were clearly not averse to bankers and equally clearly had not abandoned the acquisitional road to growth.

The new team was not slow off the mark.

In the 1988 report, Sir Colin announced the disposal of Redland's interest in fuel distribution. He says, "The process of re-shaping our group to focus resources into the three core business areas of roofing, aggregates and bricks was rounded off by the disposal last December of the whole of our interest in the fuel distribution activities of British Fuels".

A significant part of the disposal receipts were redeployed to fuel organic growth in the core businesses. But in addition, Redland had invested £50 million into a joint venture with CSR, the Australian partner in plasterboard, a completely new business area for the company.

Although not announced, Redland's stake in Braas and Company GmbH reduced to 50.8% during this time.

In 1989, overseas operations combined to produce almost 60% of the group's total operating profit, wi th a very large proportion of this combined total coming from Braas. In 1991 German earnings were separated from the rest of Europe, showing that Braas in Germany generated profits of £85.8 million, almost half of total group earnings. Redland was becoming very dependent on the Braas partnership.

Still, with a very healthy cash flow from Germany, there was scope for the new team to plan further growth of the non-Braas business and to tidy up the once-sprawling portfolio. The US roof truss and doors businesses were disposed of, leaving Redland with 3 large wholly-owned aggregates businesses and one large wholly-owned roofing business in the United States.

In 1989, Redland received a very significant public accolade. It was voted the most admired company in its sector. Significantly, the write-up that accompanied the citation said:

"The building materials industry does not have obvious appeal for high flying graduates or MBA's. But Redland has found a way round that. Its job advertisements, for instance, try not to narrow down the field: the company positively welcomes candidates from outside the construction sector. The board itself includes exiles from Fisons, Schroders, Unilever and Dixons, whose diverse skills have helped shape the marketing strategy of a company which used to be highly production-oriented.
Redland has another trick up its sleeve for luring able candidates. For the past decade or so, it has expressly used the corporate planning department as a seedbed for grooming top management talent. This gives both parties the opportunity to see whether they are suited and enables bright young hopefuls to get to know the business without getting bored with operational routine. (Our italics)
Redland's clear and consistent strategy is to be a major player in relatively few sub-sectors of the construction materials industry. This explains its recent decision to enter the fast-growing plasterboard business, deemed to have many features in common with Redland's three core businesses: high entry barriers, conversion of raw materials into a finished product and a similar customer base. In view of the company's record in process innovation and financial management, it seems well placed to challenge BPB's dominance in this business".

The idea central to the peon of praise to Redland's management was a seductive one, and peculiarly British. It was that bright people, if they put their minds to it, could do virtually anything, but could become easily bored by any thing too mundane, in this case, operating a business. Still, from the outside, the accolade appeared to be well merited, as did the award of the Queen's Award for Technological Achievement in 1990.

Meanwhile, the new team was not idle.

The plasterboard venture had not worked out. Technical problems with the plant, operating and management difficulties, but above all, the vigorous and unexpected response of competitors had made the business an embarrassing liability. The best way out seemed to be the old standby of a European partnership, so 51% in a predominantly UK activity was exchanged for a 20% stake in Lafarge Platreurope. The deal also rid Redland of the irksome difficulty of having to manage the business.

The way was now clear for the top team, supported by the bright young men in the corporate planning department, to prepare for the next move. The time was ripe for a really significant leap forward, one which would take Redland, in theory, to a size which would make it a difficult bid target, and more important, establish it as a world leader in its sector. This would be a truly significant achievement for the young team and a nice event to mark the handover of the chief executive role from Sir Colin Corness to Robert Napier.

A natural target was Steetley plc. Seemingly an almost perfect fit with Redland, Steetley was involved in aggregates, bricks and minerals.

The combination of the assets of the two companies would create the largest aggregates producer in France, supplying 10% of the market. This would correct a Redland's long-standing weakness in an important market. The combined aggregates business would have critical mass in the UK, Spain and important regional markets in the USA.

In bricks, the fit appeared to be almost perfect. Redland Bricks had great strength in the South East of England, whereas Steetley was particularly strong in the North. This market synergy would be supplemented by cost savings of £10 million from the combination of the two businesses.

Outside bricks, Redland estimated that at least an extra £20 million of savings could be realised from the merger synergies.

Most of the team were very enthusiastic. Some voices questioned aspects of the deal, in particular the price Redland might have to pay and whether Redland's management had the capacity and experience to deal with the complex merger of the various businesses. Most previous acquisitions made by Redland had either been small or free-standing. This one demanded the intricate stitching together of brick and aggregate businesses in the UK and of a sprawling aggregates business in France.

Some small voices in the investment community also wondered if this might not be one deal too far. Still, the balance of external opinion seemed to be positive and the investment banking advisers were obviously extremely enthusiastic.

As is often the case, rumours about Redland's interest in Steetley had circulated in financial circles and the press. These had not gone unnoticed by the Steetley management, who were undoubtedly already uneasy about the plunge in their share price in 1991.

As the Redland management and their advisers considered what to do Steetley announced that it had agreed to merge its brick-making activities with those of Tarmac. Tarmac would also throw in its pre-cast concrete flooring and aerated block activities. This merger would completely scupper Redland's plans.
It was now or never.

Part of the fascination of acquisitions is the psychological dynamics of deals. For certain types of people, acquisitions are almost compulsive. An executive search consultant once described a well-known business figure to us as a "deal junkie". There is the thrill of the chase and the kill, the fascination of the deal dynamics and, not least, an excitement that comes from working with enormous intensity with highly intelligent professional advisers. Deals are different from managing. They can be performed by a small group of people, who often come to feel very powerful when they think of the strategic, financial and human outcomes of what they might do. History can be made quickly, simply by taking a few risks and spending money. Certainly deal-making is not felt to be encumbered by tedious operating detail!

It is probable that the Redland management were influenced by the acquisition process and spurred by the prospect of being thwarted. At any rate, in November 1991, Redland launched a full hostile bid for Steetley, having been advised that the UK competition authorities would not block the deal. Steetley management rejected the offer and battle commenced.

In a message to Steetley shareholders on February 19^th, 1992, Sir Colin Corness was firm in his opinions, "In our view, it cannot be in the best interests of its shareholders for Steetley to contemplate an independent future with high gearing, low interest cover and a policy of paying uncovered dividends. Steetley has paid high prices to acquire its market positions in France and Spain. As slowing economic conditions increase competitive pressures, it will be difficult to prevent profit erosion whilst sustaining these positions. Moreover, many of Steetley's foreign interests, notably in France, still require streamlining and closer management integration. Steetley confronts these tasks with insufficient resources to be confident of recovering from the current recession".

In the event Redland and its advisers carried the day. Sir Colin was able to report to shareholders "On the 26^th of March, our revised offer - valuing Steetley at £624 million and offering a full cash alternative - was declared unconditional. At the time this statement goes to press, the offer has been accepted by holders of over 90% of Steetley's share capital and we look forward to a speedy and harmonious integration of the two businesses. .... Our senior management is already hard at work to implement its well thought through plans to bring together all that is best in the joint enterprise".

He goes on to congratulate Robert Napier on assuming the position of chief executive at the point that Redland has moved into the ranks of the world's leading construction materials companies.

In the annual report, Robert Napier also reported 5 new acquisitions in roofing and aggregates in the US.

In Europe, Braas purchased the remaining 51% of the Scandinavian roofing operations. This meant that Braas now managed roofing operations in Germany, Austria, Italy, Scandinavia and Switzerland, and Redland in the UK, Holland, USA, Indonesia, Japan, Malaysia and Thailand. The German roofing business hugely overshadowed all the others.

In the 1992 annual report, Robert Napier reported to shareholders , "Now that we have integrated Steetley, (Our italics) our three strong core businesses have a substantially increased presence in the United Kingdom, France and North America", That same year Braas in Germany recorded operating profits of £114.5 million, still almost half of the enlarged group's total!

By 1992, Redland had come a very long way from the small but ambitious company of the 1960's. It had progressed from being a small company to a big small company to a small big company, to its final flowering as a truly big company. In 1993, Redland entered the top half of the prestigious FTSE 100 companies. The future seemed pretty bright.