Holcim-Lafarge Said to Progress on Last-Ditch Talks to Save Deal
2015-03-18 19:25:03.663 GMT
By Aaron Kirchfeld, Jacqueline Simmons and Francois de Beaupuy
(Bloomberg) -- Holcim Ltd. and Lafarge SA are progressing
in last-ditch talks to salvage their $40 billion cement merger,
said people familiar with the matter.
A preliminary agreement on adjusted financial terms and
leadership changes could be reached as early as tonight,
according to the people, who cautioned that talks may drag on
into Thursday or yet fall apart.
The two companies are discussing a revised exchange ratio
where Holcim would give about 0.90 of a share in return for one
Lafarge share, instead of the original one-to-one ratio, said
the people, who asked not to be identified because talks are
private.
The companies have reached a preliminary understanding to
make Lafarge CEO Bruno Lafont co-chairman of the new entity amid
growing resistance to him taking the top job, they said. Another
Lafarge executive is likely to be chosen as the new CEO of the
combined entity instead, they said. Lafont would be co-chairman
with Holcim Chairman Wolfgang Reitzle, they said.
Holcim has been questioning Lafont’s ability to reach
savings targets after it outperformed its French partner on
everything from sales to profit since the deal was announced in
April last year. Lafont and Holcim managers have also clashed
over issues including leadership style and strategy, according
to the people.
Board Meetings
The boards of both companies are meeting tonight to discuss
the compromise, they said. There is pressure to reach an accord
before investors of Ireland’s CRH Plc, which agreed to buy 6.5
billion euros ($6.9 billion) in assets that Holcim and Lafarge
need to sell for regulatory approval, meet tomorrow to approve
the purchase, people familiar with the matter have said.
Lafarge rose 5.5 percent in Paris, giving it a value of 18
billion euros, while Holcim gained 2.7 percent in Zurich,
lifting the market value to 25 billion Swiss francs ($25
billion). CRH added 4.4 percent in Dublin.
The dispute over leadership by the 58-year-old Frenchman
Lafont shows how a clash of personalities can become the biggest
liability in mergers. The gum-chewing, cigar smoking Lafont and
the soft-spoken Holcim CEO Bernard Fontana, who was due to
remain in his post until the merger completion, have disagreed
on key issues from the start, a person familiar with the matter
said earlier this week.
Holcim and Lafarge have predicted the merger will lead to
cost savings of 1.4 billion euros annually, giving them an
advantage over rivals as a global recession eroded demand for
building materials and forced some kilns to run at a loss.
If the terms of the deal change to a 0.90 to 1 ratio, it
would turn the deal value positive in 2014 and 6.8 percent more
earnings accretive in 2015, according to Bloomberg Intelligence.
For Related News and Information:
Lafarge-Holcim Said to Mull Lafont as Co-Chairman for Merger
Lafarge Forecasts 2015 Profit Gains as Cement Markets Revive
CRH Buys Cement Assets From Holcim-Lafarge for $7.3 Billion
Holcim earnings graph: HOLN VX <Equity> FA ISBAR <GO>
Holcim enterprise value: HOLN VX <Equity> EV <GO>
Top Swiss stories: TOPS <GO>
Bloomberg Intelligence building-materials: BI BMATG <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
--With assistance from Matthew Campbell and Sonia Baldeira in
London and Jan-Henrik Förster in Zurich.
To contact the reporters on this story:
Aaron Kirchfeld in London at +44-20-3525-8830 or
akirchfeld@bloomberg.net;
Jacqueline Simmons in Paris at +33-1-5365-5055 or
jackiem@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net
To contact the editors responsible for this story:
Simon Thiel at +44-20-3525-2814 or
sthiel1@bloomberg.net
Andrew Noël
2015-03-18 19:25:03.663 GMT
By Aaron Kirchfeld, Jacqueline Simmons and Francois de Beaupuy
(Bloomberg) -- Holcim Ltd. and Lafarge SA are progressing
in last-ditch talks to salvage their $40 billion cement merger,
said people familiar with the matter.
A preliminary agreement on adjusted financial terms and
leadership changes could be reached as early as tonight,
according to the people, who cautioned that talks may drag on
into Thursday or yet fall apart.
The two companies are discussing a revised exchange ratio
where Holcim would give about 0.90 of a share in return for one
Lafarge share, instead of the original one-to-one ratio, said
the people, who asked not to be identified because talks are
private.
The companies have reached a preliminary understanding to
make Lafarge CEO Bruno Lafont co-chairman of the new entity amid
growing resistance to him taking the top job, they said. Another
Lafarge executive is likely to be chosen as the new CEO of the
combined entity instead, they said. Lafont would be co-chairman
with Holcim Chairman Wolfgang Reitzle, they said.
Holcim has been questioning Lafont’s ability to reach
savings targets after it outperformed its French partner on
everything from sales to profit since the deal was announced in
April last year. Lafont and Holcim managers have also clashed
over issues including leadership style and strategy, according
to the people.
Board Meetings
The boards of both companies are meeting tonight to discuss
the compromise, they said. There is pressure to reach an accord
before investors of Ireland’s CRH Plc, which agreed to buy 6.5
billion euros ($6.9 billion) in assets that Holcim and Lafarge
need to sell for regulatory approval, meet tomorrow to approve
the purchase, people familiar with the matter have said.
Lafarge rose 5.5 percent in Paris, giving it a value of 18
billion euros, while Holcim gained 2.7 percent in Zurich,
lifting the market value to 25 billion Swiss francs ($25
billion). CRH added 4.4 percent in Dublin.
The dispute over leadership by the 58-year-old Frenchman
Lafont shows how a clash of personalities can become the biggest
liability in mergers. The gum-chewing, cigar smoking Lafont and
the soft-spoken Holcim CEO Bernard Fontana, who was due to
remain in his post until the merger completion, have disagreed
on key issues from the start, a person familiar with the matter
said earlier this week.
Holcim and Lafarge have predicted the merger will lead to
cost savings of 1.4 billion euros annually, giving them an
advantage over rivals as a global recession eroded demand for
building materials and forced some kilns to run at a loss.
If the terms of the deal change to a 0.90 to 1 ratio, it
would turn the deal value positive in 2014 and 6.8 percent more
earnings accretive in 2015, according to Bloomberg Intelligence.
For Related News and Information:
Lafarge-Holcim Said to Mull Lafont as Co-Chairman for Merger
Lafarge Forecasts 2015 Profit Gains as Cement Markets Revive
CRH Buys Cement Assets From Holcim-Lafarge for $7.3 Billion
Holcim earnings graph: HOLN VX <Equity> FA ISBAR <GO>
Holcim enterprise value: HOLN VX <Equity> EV <GO>
Top Swiss stories: TOPS <GO>
Bloomberg Intelligence building-materials: BI BMATG <GO>
Top deal news: DTOP <GO>
Real M&A columns: NI REALMNA <GO>
--With assistance from Matthew Campbell and Sonia Baldeira in
London and Jan-Henrik Förster in Zurich.
To contact the reporters on this story:
Aaron Kirchfeld in London at +44-20-3525-8830 or
akirchfeld@bloomberg.net;
Jacqueline Simmons in Paris at +33-1-5365-5055 or
jackiem@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net
To contact the editors responsible for this story:
Simon Thiel at +44-20-3525-2814 or
sthiel1@bloomberg.net
Andrew Noël