Cement giants outline £25bn merger

Suzie Neuwirth

THE WORLD’S two largest cement companies yesterday confirmed their plans to merge, outlining £4bn of divestments in an attempt to assuage competition concerns.

France’s Lafarge and Swiss firm Holcim unveiled a share-for-share deal, which would create a self-proclaimed “merger of equals” with sales of €32bn (£26.5bn) and core earnings of €6.5bn.

Bruno Lafont, chairman and chief executive of Lafarge, will be chief executive of the enlarged group, while Holcim board member Wolfgang Reitzle will serve as chairman.

Due to the size and global reach of the two companies, the deal will inevitably prick up the ears of the competition authorities. The cement industry is already under scrutiny by the EU on allegations of cartel behaviour and price fixing.

Lafont confirmed yesterday that the firm would face regulatory issues in 15 jurisdictions, although these were not named. They will certainly include the EU, where talks have already commenced with the regulator.

The firms hope to complete the deal in the first half of 2015 – seen as an ambitious deadline by some analysts – and is setting its new divestment committee to work from today to sell off €4.9bn of assets, equating to 10 to 15 per cent of core earnings.

Two thirds of the disposals will come from developing countries and the rest from emerging markets, with aggregate businesses in the UK expected to be put on the block.

“We believe there is a strong appetite for these types of assets today, at the start of the recovery,” said Lafont.

“We’d hope to sell these assets before completion of the deal.”

The merger would help the firms slash costs and reduce debt in the face of soaring energy prices and a slowdown in construction activity since the 2008 economic crisis.

It is expected to create synergies of €1.4bn over three years. The companies were quick to emphasise that no plants would be shut down and that job losses would be minimal, with assets sold as going concerns.


1 Michael (left) is a Morgan Stanley veteran, while Yoel spent 24 years working at Goldman Sachs, rising to global co-head of M&A. Michael now sits on a number of boards, including the parent company of Italian newspaper La Repubblica.

2 The brothers set up Zaoui Capital in 2012, after impressive track records working on some of Europe’s largest deals. The L’Oreal/Nestle transaction was a recent coup for their new firm.

3 Michael has a plethora of diplomas and degrees, including an MBA from Harvard University. Yoel can boast a similar number of accolades, including an MBA from Stanford University.

Also advising...
Rothschild is also advising Lafarge, with key players on the team including Francois Wat, Gregoire Heuze and Olivier Pecoux. Goldman Sachs is advising Holcim, led by Francois-Xavier de Mallmann. Robin Rousseau and Fedor Schulten. Cleary Gottlieb Steen & Hamilton acted as legal counsel for Lafarge, led by Pierre-Yves Chabert. The firm acted alongside Rolf Watter at Swiss firm Bar & Karrer.

Homburger AG advised Holcim, led by Daniel Daeniker. Linklaters advised on French law with a team led by Fabrice de La Morandiere, while Freshfields Bruckhaus Deringer’s Frank Montag advised on antitrust matters.

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