The future of the proposed LafargeHolcim company recently faced uncertainty when Holcim demanded revisions to the exchange ratio and governance the two parties had agreed on in April last year. The challenge came after Lafarge posted weak 2014 financial results, which reportedly cast doubt upon Lafarge CEO Bruno Lafont’s ability to achieve cost savings for the merged entity.
Lafont had originally been positioned to head the combined companies in the role of CEO. However, the two parties have now agreed that both Lafont and Holcim chairman Wolfgang Reitzle will become non-executive co-chairmen of the LafargeHolcim board. Holcim director Beat Hess was also appointed as vice-chairman of the board.
At the time, a new CEO had not yet been named, with a Lafarge statement assuring that an appointment was expected to be made “in due course”.
The two companies also agreed on a new exchange ratio of nine Holcim shares for every ten Lafarge shares, as well as a post-closing scrip dividend of one new LafargeHolcim share for every 20 existing shares.
“I am very pleased that we are now able to proceed with our project to create a truly outstanding global leader in building materials,” Reitzle said.
Lafont added, “We are crafting a new leader in the building materials industry focusing on customers and innovation. The new company will gather best-in-class teams of our sector with the strength of our two combined companies. It creates a new business model with outstanding cash flow generation capabilities and reduced capital intensity.”
The new terms are subject to Holcim shareholder approval and a meeting has been scheduled for 7 May, 2015. However, the Lafarge statement noted that “certain key shareholders of both companies have confirmed their support for the revised merger terms”.
The merger is expected to close in July this year.
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