LaFargeHolcim, the name of the combined company after the intended merger, has the unanimous approval of both boards of directors at LaFarge and Holcim and is supported by core shareholders.
The deal will help the two companies slash costs, trim debt and better cope with soaring energy prices, tough competition and weaker demand that have hurt the sector since the 2008 global financial crisis.
According to The Australian newspaper, the merger would create the world?s largest construction materials company, with a combined market value of $USD50 billion (or $AUD53 billion).
Combined operations would include production sites located in 90 countries across all continents with a balanced and diversified portfolio.
The two companies complement each other geographically, with the French Lafarge stronger in Africa and the Swiss Holcim stronger in Latin America.
Integrating movers and shakers
LafargeHolcim would be listed on the SIX in Zurich and Euronext Paris and would continue to be headquartered in Switzerland.
The company would comprise of a board of equal numbers of Lafarge and Holcim directors. The new chairman of the board would be Holcim chairman Wolfgang Reitzle, while the current Lafarge chairman and chief executive officer Bruno Lafont would become CEO of the new group and a member of the board.
Holcim’s chief financial officer Thomas Aebischer would become LaFargeHolcim?s CFO and Lafarge’s CFO Jean-Jacques Gauthier would become chief integration officer of the new group.
The executive committee would be formed from both Lafarge and Holcim management. In order to ensure efficient execution of the merger, an integration committee will prepare the integration plan. Holcim CEO Bernard Fontana, who will remain in charge of Holcim until completion of the transaction, will co-chair the integration committee.
Emerging markets such as Latin America and Africa will account for 60 per cent of the new group’s sales, but no single country will represent more than 10 per cent. However, Lafarge and Holcim expect to face anti-trust scrutiny in 15 jurisdictions including Brazil, Canada, Ecuador, France, the UK, the US, Morocco and the Philippines.
LafargeHolcim could have a market share in excess of 50 per cent in some areas.
Even in countries such as the US where it would be smaller (and possibly Australia, where only Holcim operates), competition regulation authorities are likely to become involved.
“We are immediately going to start discussions with the European Commission and other competition regulators in a constructive spirit,” Bruno Lafont said, adding that there would be no plant closures associated with the deal.
However, The Australian has reported that Lafarge and Holcim have started discussing the need to sell assets, including cement plants and processing facilities for aggregates.
The companies may have to sell up to $5.9 billion worth of assets to overcome the concerns of anti-trust authorities.
European Commission spokesman for competition policy Antoine Colombani said that the companies had not yet formally notified the European Union about the deal. However, the Commission is already probing Holcim?s acquisition of West German cement plants owned by Cemex, as well as the combination of Holcim and Cemex?s assets in Spain.
The commission has been investigating Holcim, Lafarge and six other companies for operating a suspected cartel in cement and cement-based products since December 2010.
Completion of the merger is expected by the end of the first half of 2015, subject to obtaining the necessary regulatory approvals.
Calls to Holcim Australia about the merger were not returned before deadline. The Australian, Canadian, Japanese and US media has also been blocked from reading and accessing information on the merger through Holcim?s international website.
Sources: AggNet, Global Cement, KHL, Rock Products, The Australian