Holcim and Lafarge back on track

By Sandy Guthrie20 March 2015

Bruno Lafont - Chairman and CEO of the Lafarge Group

Bruno Lafont - Chairman and CEO of the Lafarge Group

Merger plans for Holcim and Lafarge appear to be back on track having stalled earlier this week, with revised terms agreed between the two companies, and a change to the planned appointment of a CEO for the merged companies.

The merger between Swiss-based cement group Holcim and French firm Lafarge would create what is believed to be the largest cement group in the world, with combined assets worth €40 billion.

The boards of the two firms have said that they have reached an agreement on revised terms for the merger, with both parties agreeing on a new exchange ratio of nine Holcim shares for ten Lafarge shares.

A new CEO for the combined group, to be proposed by the Lafarge board and accepted by the Holcim board, will be appointed from the closing of the transaction. The companies said the appointment was expected to be communicated in due course, at the latest on the filing of the public offer to the Lafarge shareholders.

Bruno Lafont, chairman and CEO of Lafarge, had been chosen as CEO designate for the new group, while Wolfgang Reitzle, chairman of Holcim, was to chair the new board. Now it is planned that Reitzle and Lafont will be non-executive co-chairmen of the board. Beat Hess, Holcim’s deputy chairman, will be vice chairman of the board.

Lafarge and Holcim have agreed that, subject to shareholder approval, the new company will announce a post-closing scrip dividend of one new LafargeHolcim share for each 20 existing shares.

The two companies said they were continuing to work intensively on preparing the closing of the transaction and the successful integration post-merger.

Holcim and Lafarge said certain key shareholders of both companies had confirmed their support for the revised merger terms. The companies expect the transaction to close in July 2015.

Reitzle said, “I am very pleased that we are now able to proceed with our project to create a truly outstanding global leader in building materials. Bruno Lafont and I will work closely together to ensure that the value creation potential of this merger will be realised for the benefits of all shareholders.

“I want to highlight that Bruno has made a tremendous contribution to getting us this far and that I am very confident in our ability to work together in the new board.”

Lafont said, “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.”

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