TheChek News Flow

Deal could be announced in days and the North American operations eventually listed

The Swiss cement giant Holcim is near a deal to separate out its North American business, according to people familiar with the matter.

The company could announce its plans in the coming days, the people said, adding that the North American business could eventually be listed in the US.

Based in Zug, Holcim is the result of a 2015 merger between France’s Lafarge and Switzerland’s Holcim that created the world’s largest cement company. Holcim trades at a market capitalisation of about 37.2bn CHF ($43.1bn).

In its first-half results last year, Holcim said that North America was set to contribute around $12bn of net sales in 2023, representing about 40 per cent of the group’s total.

It added that it was North America’s leading cement supplier, and a top provider of commercial flat roofing and concrete. The company has about 350 locations across 43 states in the US and employs 7,000 people, according to its website.

Since its own merger almost a decade ago, Holcim has remained active in dealmaking.

In 2022, Holcim agreed to sell its Indian businesses to Adani Group for $10.5bn in cash.

The previous year, the group agreed to buy Firestone Building Products from Japan’s Bridgestone Corporation for $3.4bn to strengthen its position in the US. The deal was intended to help Holcim break into the lucrative flat roof market.

European companies have looked to US listings for the higher valuations and greater market liquidity and analyst coverage they can bring.

CRH, the world’s largest building materials group, last year moved its primary listing from London to New York.

Holcim did not respond to immediate requests for comment. The WSJ first reported Holcim’s plans.

Industry, lawmakers worry semiconductor production could take years because of negotiations, permitting and worker shortages

WASHINGTON—The Biden administration, eager to highlight a signature economic initiative as elections approach, is expected to award billions of dollars in subsidies to Intel, Taiwan Semiconductor Manufacturing Co., or TSMC, and other top semiconductor companies in coming weeks to help build new factories.

The grants are part of the $53 billion Chips Act, intended to reshore production of advanced microchips and fend off China, which is fast developing its own chip industry.

The slow pace of implementation of the 2022 bipartisan law has frustrated some. More than 170 firms have applied but, to date, just two tiny grants have been made, to makers of less advanced chips.

Industry executives familiar with negotiations said the forthcoming announcements are for much larger sums, in the billions of dollars, and aimed to kick-start manufacturing of advanced semiconductors that power smartphones, artificial intelligence and weapons systems.

The executives expect some announcements to come before the State of the Union address scheduled for March 7, when President Biden, a Democrat, will seek to showcase his economic achievements as the presidential campaign picks up steam. Former President Donald Trump is the front-runner for the Republican nomination.

“There is pressure obviously to get the big names funded before things start really heating up,” said William Rinehart, a senior fellow for technology and innovation for the American Enterprise Institute, a think tank.

The announcements are preliminary, to be followed by due diligence and then final agreements. Funds will be released in stages as the projects progress.

Some lawmakers and industry officials worry that, because of permitting and other delays, it could be years before the taxpayer-subsidized factories are churning out made-in-America chips.

Among the likely recipients is Intel, which is led by CEO Pat Gelsinger and has projects under way in Arizona, Ohio, New Mexico and Oregon that will cost more than $43.5 billion. Another is TSMC, with two fabrication plants, or fabs, under construction near Phoenix for a total investment of $40 billion. Arizona and Ohio are considered battleground states in November’s presidential and congressional races.

South Korea’s Samsung Electronics has a $17.3 billion project near Dallas. Micron Technology, Texas Instruments and GlobalFoundries count among other top contenders, industry executives say.

“Certainly, in the early part of this year, we will be announcing major progress,” Michael Schmidt, director of the Chips Program Office, said. “We are on schedule.”

A Commerce Department spokeswoman declined to discuss individual applications, timing or award amounts. “This is a merit-based process with tough commercial negotiations—CHIPS awards will be entirely dependent upon which projects will advance U.S. economic and national security,” she said.

The Chips Act includes $39 billion in manufacturing grants to cover as much as 15% of the total cost of each project up to $3 billion per fab, as well as loans, loan guarantees and tax credits.

How the Chips Act is implemented makes for an early test of Washington’s ability to carry out industrial policy—government support for industries deemed strategic—where China, Japan and Germany have far more practice.

Delivering on signature economic policies—such as the Chips Act, a 2021 infrastructure law, and the 2022 Inflation Reduction Act aimed at renewable energy—is also urgent for Biden’s re-election push. The laws are individually popular: An October survey by progressive-aligned Navigator Research showed the Chips Act was among the more popular Biden programs, with 69% of respondents expressing support.

But voters overall have a dim view of Biden’s economic stewardship. A December poll by The Wall Street Journal found “Bidenomics,” the collective moniker for such programs, is viewed favorably by less than 30% of voters and unfavorably by more than half.

Part of the gap might lie in how long it has taken to actually implement the laws. The Chips Act’s requirements on workforce and national security have complicated the funding negotiations. Shortages of skilled workers loom.

TSMC, which produces roughly 90% of the world’s most advanced chips, said last week it expected to delay production at the second of its Arizona plants by one to two years, citing uncertainty over U.S. incentives. TSMC had earlier postponed the opening of the first fab from 2024 to the first half of 2025.

“The main reason is the lead time and the alternatives that these firms have,” said John VerWey, an adviser on security and technology at the federal Pacific Northwest National Laboratory who has studied regulatory hurdles for plant constructions in the U.S. “When TSMC wants to build a fab in Taiwan or in Japan, they can do so much faster than they can in the U.S.”

Administration officials say that the Chips Act has already spurred private sector investments exceeding $200 billion. Some 12,000 people work daily at TSMC’s Arizona site.

“Let’s think about what’s possible 10 years from now if we are bold,” Commerce Secretary Gina Raimondo said in February last year.

The most immediate threat to the timely construction is the National Environmental Policy Act, which requires large federally funded projects to pass environmental review before grants are released, regardless of whether they have already obtained state and local government permits. Full NEPA reviews took an average of 4.5 years between 2013 and 2018, according to a federal government report. Critics say each year of delay adds roughly 5% to the construction cost of a chip plant.

A Senate-passed bill exempting major Chips Act projects from NEPA review has failed to gain traction in the House. Some Republicans want a wider permitting overhaul covering energy and other sectors. Some Democrats worry about diluting environmental standards.

“The process could take five years and that’s not the intention of why we are doing this thing,” said Sen. Mark Kelly (D. Ariz.), a lead author of the Senate bill. “We are trying to get these chips built here in the United States as soon as we possibly can.”

Industry executives also say negotiations have been complicated by a lack of clarity on how the program’s rules will work. Some executives in private complain that what the Commerce Department has offered so far is insufficient. They also worry about accompanying conditions, such as activity in China, sharing of excess profits with the government and paying construction workers union-scale wages.

A shortage of skilled workers has been cited as a reason for potential delays. The Semiconductor Industry Association, a trade group, estimates the industry will face a shortfall of 67,000 workers by 2030, including technicians, computer scientists and engineers.

“The chip industry is capital-intensive and, as such, firms need predictability,” said Jimmy Goodrich, a semiconductor expert advising Rand Corp. “They will hedge significant investments such as purchasing equipment, which accounts for 80% of fab costs, until they are certain that there is market demand and that government incentives will be in place at the level needed to compete globally.”

A deal for Holcim’s North American operation could value it at over $30 billion

Switzerland’s Holcim HOLN -0.06%decrease; red down pointing triangle is nearing a deal to separate out its North America business, a big supplier of building materials that could be worth more than $30 billion.

The deal could be announced this coming week, assuming the plans don’t fall apart at the last minute, according to people familiar with the matter.

Holcim shares have moved little from where they sat a decade ago, which is likely behind the desire to unlock value in the fast-growing North American operation. There is no guarantee the company will achieve the expected valuation.

In North America, Holcim is among the largest suppliers of cement, commercial flat-roofing materials and ready-mix concrete. In 2022, the business generated 35% of the parent’s total net sales of more than 29 billion Swiss francs, equivalent to about $33.6 billion, and that is expected to have reached about 40% last year, the company said this past summer.

Holcim, based in Zug, Switzerland, has a market capitalization of roughly 36.9 billion Swiss francs. Its creation was the result of the hotly contested merger of Lafarge, then of France, and Holcim, of Switzerland, in 2015. The combined company had been known as LafargeHolcim until 2021, when it adopted its current name.

Eventually, the idea would be to take Holcim’s North American business public in the U.S., making it easier for investors to value the operation separate from the parent company’s divisions in Europe, Latin America, Asia, the Middle East and Africa. That would also allow it to use its own stock to fund future acquisitions.

Increased government spending on infrastructure in the U.S. has bolstered companies in the building-products sector like Holcim that play a key role in efforts to transition to cleaner energy and to rebuild the nation’s roads.

Holcim operates through four business segments: Cement, Ready-Mix Concrete, Aggregates and Solutions & Products. In the U.S., Holcim has close to 350 sites in 43 states and employs 7,000 people, according to the company’s website.

In 2021, Holcim completed the roughly $3 billion acquisition of Firestone Building Products, which makes commercial roofing and other building products. The move was aimed at bolstering what the company said was its biggest market by sales.

The decision by CRH, a Holcim rival, to list in New York shows the perks of going public here. The Dublin company previously had its primary listing in London but switched it in September because the company generates most of its operating profit in the U.S., a market that offers more acquisition opportunities. CRH’s stock is up more than 24% since then.

Shares in LafargeHolcim made their debut on the Swiss and Paris stock exchanges more than eight years ago with a market capitalization of about 41 billion Swiss francs.

The choice of a leader for the merged company threatened to undo the deal nearly a year after it was first agreed. Both companies also had to shed assets around the world to get approval from regulators, while investors harbored other concerns over the transaction.

LafargeHolcim was established to pivot the companies away from developed markets and toward faster-growing economies in Africa and Asia.

System’s complexity, Israel’s war aims and lack of manpower hinder effort

As much as 80% of Hamas’s vast warren of tunnels under Gaza remains intact after weeks of Israeli efforts to destroy them, U.S. and Israeli officials said, hampering Israel’s central war aims.

Thwarting Hamas’s ability to use tunnels is the keystone to Israel’s effort to capture top Hamas leaders and rescue the remaining Israeli hostages, Israeli officials have said. And Israel has said it has conducted strikes on hospitals and other key infrastructure in its pursuit of the tunnels.

Disabling the tunnels, which run for more than 300 miles under the narrow strip—or roughly half the New York City subway system—would deny Hamas relatively safe storage for weapons and ammunition, a hiding place for fighters, command-and-control centers for its leadership, and the ability to maneuver around the territory unexposed to Israeli fire, Israel has said.

Israel has sought various methods to clear the tunnels, including installing pumps to flood them with water from the Mediterranean, destroying them with airstrikes and liquid explosives, searching them with dogs and robots, destroying their entrances and raiding them with highly trained soldiers.

More than 25,000 people, the majority women and children, have been killed in Gaza since the start of hostilities, according to Palestinian authorities. Those figures don’t distinguish between combatants and civilians.

U.S. and Israeli officials have had difficulty precisely assessing the level of destruction of the tunnels, in part because they can’t say for certain how many miles of tunnels exist. The officials from both countries estimate 20% to 40% of the tunnels have been damaged or rendered inoperable, U.S. officials said, much of that in northern Gaza.

Israel is “thoroughly and gradually dismantling the tunnel network,” the Israel Defense Forces said in a statement. The White House and the Office of the Director of National Intelligence declined to comment.

Late last year, in an operation called “Sea of Atlantis,” Israel installed a series of pumps in northern Gaza, despite concerns about the potential impact of pumping seawater on the territory’s freshwater supply and above ground infrastructure. Israel’s bombing of the tunnels has inflicted widespread destruction to buildings on the surface.

Earlier this month, Israel installed at least one pump in the southern Gaza city of Khan Younis to disrupt the tunnel network there, a U.S. official familiar with the effort said. The first pumps installed within Gaza used water from the Mediterranean Sea, while the latest pump draws water from Israel, the official said.

In some places, walls and other unexpected barriers and defenses slowed or stopped the water flow, U.S. officials said. Seawater has corroded some of the tunnels, but the overall effort wasn’t as effective as Israeli officials had hoped, U.S. officials said.

“Hamas’s strategy revolves around the tunnels—it is their center of gravity. They needed the tunnels to level the battlefield with the IDF,” said Mick Mulroy, a former deputy assistant secretary of defense and officer in the Marine Corps and Central Intelligence Agency. “The tunnels are where Hamas planned [before Oct. 7] to wait out Israel’s political will as Israel faced pressure for a cease-fire.”

Israel has units that specialize in clearing tunnels but many of those troops are engineers trained to destroy them, not search for hostages and top Hamas leaders, U.S. officials said. In particular, more troops are needed to clear the tunnels, the officials said.

In addition, Israel’s primary war aims—killing or capturing top Hamas leaders and rescuing the roughly 100 remaining hostages—are, at times, at odds, officials said.

“The question is: Is there a real way to get the hostages out alive?” said a senior Israeli military official. “Otherwise we would have been much more forceful in our approach.”

Some of the hostages are being held in a command center in a tunnel under Khan Younis, Israeli officials said. Hamas’s top leader in Gaza, Yahya Sinwar is hiding in the same location, according to the senior Israeli military official.

A raid on that command center could endanger the hostages, according to former Israeli officials and military analysts, a dilemma that amounts to a choice between killing Sinwar and negotiating the release of some or all of the remaining hostages.

The official said the military’s approach was focused on clearing “nodes” within the tunnels where Hamas leaders and fighters are hiding, rather than checking or destroying the entire system.

“It’s a very hard mission. It’s done slowly, very carefully. It’s urban warfare unseen globally,” the official said.

Even locating Sinwar and the remaining hostages could prove to be a difficult task.

Gershon Baskin, a hostage negotiator who facilitated the 2011 deal with Hamas that freed Israeli soldier Gilad Shalit from captivity in Gaza, said Israel didn’t know where he was held for years.

“It’s unbelievable that this is Israel’s backyard and how little intelligence information they have,” he said.

Earlier this month, the Israeli military took reporters on a tour of the tunnels in southern Gaza, around Khan Younis, and said there was evidence hostages had been held there. But they couldn’t say when they had been moved.

Malgré une facture au plus haut pour le fixe et le mobile, les opérateurs français ralentissent. Menacés par les Gafam, contraints par les investissements qui rognent leurs marges, il leur faut de nouveaux relais de croissance.

Dans le petit monde des télécoms, on n’échappe pas au lent poison de l’inflation. La facture mensuelle des utilisateurs d’Internet croît de 1,50 euro en un an au troisième trimestre 2023, s’établissant à 34,80 euros. « Un niveau jamais atteint en dix ans », note l’Arcep, l’autorité de régulation des télécoms. La facture moyenne des abonnés au mobile, elle, progresse plus lentement, de 20 centimes en un an, pour atteindre 15,20 euros par mois au troisième trimestre 2023. De quoi doper légèrement les revenus des opérateurs, après dix années de recul, à 9,4 milliards d’euros au troisième trimestre 2023 selon l’institution.

L’augmentation de la facture est une « conséquence directe des hausses tarifaires survenues sur le marché », souligne l’Arcep. L’explosion des coûts logistiques, de transport, des semi-conducteurs et de l’énergie ont asséné un coup au secteur. Et impacté « directement le fonctionnement des infrastructures télé­coms », reconnaît Bouygues ­Telecom. Comme Orange et SFR, ce dernier a ajusté ses prix de 1 à 2 euros. Certains ont réduit la durée des offres promotionnelles de 12 à 6 mois, voire les ont supprimées à l’automne dernier, quand d’autres ont multiplié les forfaits avec une consommation réduite de données.

Xavier Niel, lui, s’est engagé à bloquer les prix des deux forfaits phares d’Iliad (Free) jusqu’en 2027, soit les deux offres mobiles de base à 2 euros et à 19,99 euros. Mais pour engranger des bénéfices, Free joue sur l’offre booster, c’est-à-dire les options que le client peut acheter en plus de l’offre de base, dont le prix et les services varient selon les périodes. Des hausses « modérées », tempère Anne-Laure Durand, cheffe de l’Observatoire des marchés à l’Arcep : « Sur le fixe, les prix remontent très lentement depuis la baisse drastique en 2018 ».

Le succès de la 5G

Les tarifs en France restent parmi les plus bas d’Europe, après la ­Pologne sur le fixe et l’Italie sur le mobile, selon la Fédération française des télécoms (FFT). Surtout, ils croissent moins vite que l’inflation : six fois moins entre 2021 et 2022, déplore la FFT. Au-delà des prix, la croissance de la facture globale trouve sa racine dans le succès des abonnements 5G, plus onéreux. Avec 1 million d’utilisateurs de plus par trimestre, la France en compte 12,4 millions. Côté fixe, la fibre optique, plus chère que l’ADSL, séduit de plus en plus, avec 20,6 millions de clients selon l’Arcep.

Pas suffisant pour redonner le sourire à un secteur fragilisé par les guerres de prix à répétition, des investissements lourds et une sempiternelle bataille contre les géants du numérique. Les opérateurs s’inquiètent de marges très étroites et d’une croissance de 2 % en moyenne par an depuis 2018. « C’est la quadrature du cercle », soupire Romain Bonenfant, directeur général de la FFT. En 2022, les opérateurs ont investi 14,6 milliards d’euros dans les réseaux – soit 1,7 fois le budget des jeux Olympiques 2024. Près de deux fois le montant qu’ils investissaient il y a dix ans, en 2012.

Ces dépenses ont été englouties par l’immense chantier de la fibre optique, déployée à vitesse record sur le territoire pour répondre à l’objectif de généralisation du très haut débit en 2025. L’installation de nouvelles antennes 5G a aussi été gourmande en cash, nécessitant 3,8 milliards d’euros en 2022. « Il faut réinvestir massivement tous les dix ans dans le secteur », note Didier Levy, associé au cabinet Roland ­Berger. Pour doper les recettes, les opérateurs cherchent de nouveaux clients. Mais dans un secteur où les taux de pénétration dépassent les 80 %, cela relève de la haute voltige.

Gafam dominateurs

Les groupes de télécoms misent beaucoup sur une « juste contribution » des Gafam. Mais là encore, les perspectives ne sont guère réjouissantes. En utilisant les réseaux, les géants du Net font exploser la facture des opérateurs et captent la majeure partie de la chaîne de valeur. Meta, Apple, Microsoft et Netflix ont monopolisé 55 % du trafic en 2022 selon l’Etno, le lobby européen. D’où le combat de longue date pour faire payer ces géants. Tous les opérateurs attendent de pied ferme les premières conclusions d’une vaste consultation lancée en février par la Commission européenne.

Au-delà du partage de la valeur, se pose la question du devenir même des opérateurs, en perte de vitesse face aux Gafam. L’arrivée prochaine d’un iPhone uniquement compatible avec l’e-Sim, sans tiroir pour carte physique, les marginalisera un peu plus, avec le risque de perdre le lien direct avec leurs abonnés.

Les opérateurs peuvent se consoler avec le segment entreprises, en forte croissance. Historiquement dominé par Orange et SFR, le marché estimé à 10 milliards d’euros aiguise bien des appétits. Dans son plan stratégique, Christel Heydemann, directrice générale d’Orange, a sifflé la fin des projets de diversification et mis le cap sur son cœur de métier, notamment ses services de cloud et de cybersécurité.

De son côté, Iliad vient d’acquérir un supercalculateur pour doter Scaleway, sa filiale de fournisseur de services informatiques dématérialisée, de « la plus grande puissance de calcul » du continent et devenir un « champion européen de l’IA ». « Les opérateurs ont une carte à jouer dans la numérisation et sur le marché des entreprises où il y a de vrais besoins », note Didier Levy. Autant dire un eldorado.

Not a bad week for a big funding announcement, as there were a couple nine-figure rounds in energy and loyalty rewards, but several just slightly smaller ones in a variety of other sectors. As the month wore on, investors seem to be opening their wallets — or at least the announcements were made.

1. Recurrent Energy, $500M, energy: This large round may have gone under the radar for many, but Austin, Texas-based Recurrent Energy secured a $500 million preferred equity investment from BlackRock. The company — a utility-scale solar and energy storage project development, ownership and operations platform — will use the new capital to grow its “high value project development pipeline.” Recurrent is a subsidiary of Canadian Solar, and that company will continue to own the remaining majority shares of Recurrent after the investment closes. Founded in 2006, the company has raised about $1.4 billion, per Crunchbase.

2. Bilt Rewards, $200M, loyalty rewards: Everybody loves loyalty rewards, and investors must know that. Bilt Rewards raised a $200 million round led by General Catalyst at a $3.1 billion valuation — more than double the number after its last fundraising in 2022. The New York-based startup allows consumers to earn rewards on the rent they pay. Bilt plans to use some of the proceeds to expand its network to include local dining, grocery stores, ridesharing and other retail purchases. The company also appointed some big names to roles in the company, naming Ken Chenault, former chairman and CEO of American Express, as its chairman, and Roger Goodell, the commissioner of the NFL, as an independent director. The company reported its annualized member spend is nearing $20 billion. It also became profitable on an earnings before interest, taxes, depreciation and amortization basis last year. Those metrics must have impressed investors, as Bilt has seen its valuation shoot up after raising a $150 million Series B at a pre-money valuation of $1.4 billion in October 2022. Founded in 2021, the company has raised a total of $413 million, per Crunchbase.

3. BillingPlatform, $90M, fintech: BillingPlatform’s revenue lifecycle management platform got a big shot in the arm this week with a $90 million round led by FTV Capital. Every company wants to increase revenue and find new revenue streams, so clearly FTV sees a growing market for the Denver-based startup’s platform. Founded in 2012, the company has now raised $104 million, per Crunchbase.

4. ElevenLabs, $80M, AI: Voice AI startup ElevenLabs raised an $80 million Series B at a unicorn valuation as investor interest in all AI tech remains at an all-time high. The Brooklyn-based company did not release an exact valuation, but did say it had reached “unicorn status.” That represents a significant up round from its Series A in June, when the firm raised $19 million at a $99 million post-money valuation. The Series B was co-led by Andreessen Horowitz, Nat Friedman and Daniel Gross. ElevenLabs allows creators, enterprises and others to use AI software to replicate voices in dozens of languages. Founded in 2022, ElevenLabs has raised $101 million, per Crunchbase.

5. (tied) Accent Therapeutics, $75M, biotech: Another week, another big biotech round. Lexington, Massachusetts-based Accent Therapeutics, a biopharmaceutical company developing small molecule precision cancer therapies, raised a $75 million Series C led by Mirae Asset Capital Life Science. The startup is looking at therapies to address several cancers with large patient populations, including breast and colorectal cancers. The round included participation from some big brand names, such as Bristol Myers Squibb and Johnson & Johnson Innovation. Founded in 2017, the company has raised $178 million, per Crunchbase.

5. (tied) LB Pharmaceuticals, $75M, biotech: Accent wasn’t the only $75 million raise this week, as we had a trio. LB Pharmaceuticals, a schizophrenia biotech startup, closed a $75 million Series C as it began a Phase II trial last month, Endpoints News reported. Founded in 2015, the company has raised more than $133 million, per Crunchbase.

5. (tied) Sion Power, $75M, energy: Tucson, Arizona-based Sion Power, a developer of next-generation batteries for electric vehicles, also secured $75 million in a Series A led by LG Energy Solution. VCs see big potential in EV batteries, so the investment size is not a shock. Founded in 1994, the company has raised $145 million, per Crunchbase.

8. SmithRx, $60M, health care: San Francisco-based SmithRx, a pharmacy benefits management company, closed a $60 million Series C led by Venrock. Founded in 2016, the company has raised nearly $98 million, per Crunchbase.

9. AiDash, $50M, climate: San Jose, California-based AiDash, a SaaS startup helping infrastructure companies be more climate-resilient and sustainable with satellites and AI, raised a $50 million Series C led by Lightrock. Founded in 2019, the company has raised $83 million, per Crunchbase.

10. CheckSammy, $45M, recycling: Dallas-based CheckSammy, a bulk waste operator, closed a $45 million strategic investment led by I Squared Capital. Founded in 2018, the company has raised nearly $66 million, per Crunchbase.

Recurrent’s raise was top globally, but the second largest came from Sweden.