Russian shareholder eyes Lafarge and Holcim disposals
The second largest shareholder in cement group Holcim agreed to support the $40bn merger with France’s Lafarge on the understanding that he could bid to add some of the divested assets to his existing cement portfolio.
Filaret Galchev, one of Russia’s richest men, accepted the deal to create the world’s largest cement company as it could allow him to pick up some of the €5bn worth of assets set to be divested, according to sources close to the deal.
Last month Holcim and Lafarge agreed to a “merger of equals” to create a global cement group with combined sales of $40bn. The deal will have to be cleared by up to 15 national regulators and is expected to lead to significant divestment of assets.
Mr Galchev, who did not respond to a request for comment, controls Eurocement, Russia’s biggest cement maker by sales with plants in Russia, Ukraine and Uzbekistan. His company has an 11 per cent stake in Holcim.
People close to the deal said that Mr Galchev will have to bid for the assets in a tender process, competing with private equity firms and other big cement groups, but the likely sale of some choice sites was a reason for his supporting the deal.
The company said that the disposals, set to be mainly in developed markets, represent capacity generating between 10-15 per cent of the combined company’s earnings before interest, tax, depreciation and amortisation, which was €6.5bn at the end of 2013. It said it would divest assets worth about €5bn in sales.
The deal was brokered by some shareholders at Holcim and Lafarge in consultation with senior management in talks that started in July 2013.
It was seen as an opportunity to gain critical mass and shed European assets in a sector that has been stricken by overcapacity.
Shareholders involved included Nassef Sawiris, Egypt’s richest man who owns 15 per cent of Lafarge, Albert Frère, who owns 21 per cent of Lafarge through Groupe Bruxelles Lambert, and Thomas Schmidheiny, who owns 20 per cent of Holcim.
Mr Galchev was not involved in the initial negotiations, said people close to the talks. He has a frosty relationship with Holcim’s largest shareholders, the Schmidheiny family, after what was perceived as a hostile attempt to build up his stake in 2008 and 2011.
One person close to the talks said that part of the attraction for the Schmidheiny family in going through with the Lafarge merger was that it would dilute the shareholding of Mr Galchev, preventing the possibility of any takeover.
Holcim and the Schmidheiny family declined to comment.