Holcim, Lafarge Said to Reach Agreement to Salvage Merger (1)
2015-03-20 00:37:26.730 GMT
(Updates with no comment from Lafarge in sixth paragraph.)
By Aaron Kirchfeld, Francois de Beaupuy and Jacqueline Simmons
(Bloomberg) -- Holcim Ltd. and Lafarge SA reached an
agreement to salvage their $40 billion merger to form the
world’s biggest cement company, two people with knowledge of the
matter said.
An announcement could come as soon as Friday morning, said
the people, who asked not to be identified discussing private
information. The two companies revised the exchange ratio so
that Switzerland-based Holcim will give about 0.90 of a share in
return for one share of Paris-based Lafarge, instead of the
original one-to-one ratio, the people said.
Holcim questioned the ability of Lafarge Chief Executive
Officer Bruno Lafont to reach savings targets for a combined
company after it outperformed its French partner on everything
from sales to profit. Lafont and Holcim managers also clashed
over issues including leadership style and strategy, people
familiar with the situation have said.
The companies reached an understanding to make Lafont co-
chairman of the new entity alongside Holcim Chairman Wolfgang
Reitzle following resistance to Lafont becoming CEO of the
merged company, people familiar have said.
A Lafarge candidate for CEO has been identified but will
not be announced or finalized Friday, the people familiar with
the latest developments said. There could still be a surprise
delay or turn in events.
Holcim couldn’t immediately be reached for comment outside
of regular business hours and a representative for Lafarge
declined to comment.
Personality Clash
Lafarge dropped less than 1 percent in Paris Thursday,
giving it a value of 18 billion euros ($19 billion), while
Holcim gained 1.1 percent in Zurich, lifting the market value to
25 billion Swiss francs.
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
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.
Shareholders 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, Thursday approved the
purchase.
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>
Top Stories:TOP<GO>
To contact the reporters on this story:
Aaron Kirchfeld in London at +44-20-3525-8830 or
akirchfeld@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net;
Jacqueline Simmons in Paris at +33-1-5365-5055 or
jackiem@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Dan Reichl
2015-03-20 00:37:26.730 GMT
(Updates with no comment from Lafarge in sixth paragraph.)
By Aaron Kirchfeld, Francois de Beaupuy and Jacqueline Simmons
(Bloomberg) -- Holcim Ltd. and Lafarge SA reached an
agreement to salvage their $40 billion merger to form the
world’s biggest cement company, two people with knowledge of the
matter said.
An announcement could come as soon as Friday morning, said
the people, who asked not to be identified discussing private
information. The two companies revised the exchange ratio so
that Switzerland-based Holcim will give about 0.90 of a share in
return for one share of Paris-based Lafarge, instead of the
original one-to-one ratio, the people said.
Holcim questioned the ability of Lafarge Chief Executive
Officer Bruno Lafont to reach savings targets for a combined
company after it outperformed its French partner on everything
from sales to profit. Lafont and Holcim managers also clashed
over issues including leadership style and strategy, people
familiar with the situation have said.
The companies reached an understanding to make Lafont co-
chairman of the new entity alongside Holcim Chairman Wolfgang
Reitzle following resistance to Lafont becoming CEO of the
merged company, people familiar have said.
A Lafarge candidate for CEO has been identified but will
not be announced or finalized Friday, the people familiar with
the latest developments said. There could still be a surprise
delay or turn in events.
Holcim couldn’t immediately be reached for comment outside
of regular business hours and a representative for Lafarge
declined to comment.
Personality Clash
Lafarge dropped less than 1 percent in Paris Thursday,
giving it a value of 18 billion euros ($19 billion), while
Holcim gained 1.1 percent in Zurich, lifting the market value to
25 billion Swiss francs.
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
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.
Shareholders 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, Thursday approved the
purchase.
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>
Top Stories:TOP<GO>
To contact the reporters on this story:
Aaron Kirchfeld in London at +44-20-3525-8830 or
akirchfeld@bloomberg.net;
Francois de Beaupuy in Paris at +33-1-5365-5051 or
fdebeaupuy@bloomberg.net;
Jacqueline Simmons in Paris at +33-1-5365-5055 or
jackiem@bloomberg.net
To contact the editors responsible for this story:
Mohammed Hadi at +1-212-617-2914 or
mhadi1@bloomberg.net
Elizabeth Wollman, Dan Reichl