Swiss Building-Materials Giant Plans Separation of U.S. Business
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.