The world’s two largest cement producers,
The merger, planned for completion in the first half of 2015 will create LafargeHolcim, “the most advanced group in the building materials industry.”
Wolfgang Reitzle (president of the executive board and CEO of Linde and an independent director of Holcim since 2012) will be chairman and Bruno Lafont, current chairman and CEO of Lafarge, will be CEO of the new entity and a member of the board.
In order to ensure efficient execution of the merger, an integration committee will prepare the integration plan to be implemented straight after the closing of the transaction.
Bernard Fontana, Holcim CEO, will remain in charge of Holcim until completion of the transaction. He will co-chair the integration committee.
Any merger will come under the scrutiny of competition authorities, but it could lead to a worldwide mega cement company. The grouping would have a dominant position in both Europe and the United States.
Regulators would probably require the companies to shed cement plants and distribution facilities before approving any merger as happened recently in the Lafarge-Tarmac tie-up in the UK. This was only agreed by the UK Competition Commission after both agreed to sell a significant number of assets.
Lafarge, the world’s largest cement producer, and Holcim, also have major interest in aggregates and concrete.
Rolf Soiron, current Chairman of Holcim, said: “This proposed merger is a once in a lifetime opportunity to deliver substantially better value to customers with more innovation, a wider range of products and solutions and more sustainability and enhanced returns to shareholders.
“LafargeHolcim will be uniquely positioned to take advantage of growth in developed markets and the world’s fastest growing economies by supplying the materials that will enable the construction industry to meet the challenges of the future.
“Both companies put customers and staff development first to ensure that the new group can deliver best in class operational excellence.”
Bruno Lafont said: “I am very proud to propose today this new chapter in Lafarge’s long industrial history which is the fruit of the commitment of our people over the years. By combining Holcim’s experienced teams, complementary geographies and innovative expertise with ours, we propose to set up the most advanced group in the construction industry, for the benefit of our clients, our employees and our shareholders.
“I am confident that this merger of equals provides a unique opportunity to rapidly create the most advanced platform in our industry with outstanding synergies.
“With a best in class international portfolio, robust balance sheet and strong governance, the new group will offer higher growth and low risk, thus creating more value.
“For years, I have had the utmost respect for Holcim.
“The merger of Lafarge and Holcim will allow the group with strong roots in Europe to enter into a new dimension in our ambition to contribute to building better cities on a global scale and in a sustainable manner.”
In a joint statement the companies say that LafargeHolcim will have an unprecedented range of products and services to answer the changing demands of the building materials industry and the challenges of increasing urbanisation.
The merger transaction will be structured as a public exchange offer initiated by Holcim with an exchange ratio of one Holcim share for one Lafarge share.
There will be enhanced performance through incremental synergies totaling more than CHF 1.7 billion/€1.4 billion on a full run-rate basis phased in over three years with one-third in year one.
Strategic optimisation of portfolio while anticipating regulatory requirements through divestments: 10% to 15% of the global Ebitda.
The combined group will be positioned in 90 countries around the world with a balanced exposure to both developed and high growth markets, and there will be clearly defined governance with an equally composed board (seven from Lafarge, seven from Holcim).
The merger plan has been unanimously approved by their respective board of directors and fully supported by the core shareholders of both companies.
“This new global company with European roots would deliver compelling benefits for all stakeholders,” says the statement.
“LafargeHolcim would be in the best position to contribute to addressing the challenges of urbanization: affordable housing, urban sprawl and transport. The new group would increase its offer to customers through innovation delivered on an expanded scale, best in class R&D and a combined portfolio of solutions and products. Both companies have pioneered sustainability and climate change mitigation in the industry and are committed to take it to the next level.
“LafargeHolcim would have an enhanced presence in the global building materials sector with a number one position globally across cement, concrete and aggregates and new opportunities to optimise production and commercial networks.
“After a strategic optimisation of the portfolio through a pro-active divestment process, in anticipation of regulatory requirements, LafargeHolcim would occupy complementary positions.
“Combined operations would include production sites located in 90 countries across all continents with the most balanced and diversified portfolio in the industry. This will deliver highly attractive growth prospects across both high growth and developed markets. No country would account for more than 10% of combined revenues.
“LafargeHolcim would continue to be domiciled in Switzerland. It would operate under the local governance rules with a board composed with equal numbers of Lafarge and Holcim directors and through an efficient distribution of central corporate functions in France and Switzerland.”
