Holcim and Lafarge merger gains approval

By Neill Barston16 December 2014

The planned merger between cement groups Lafarge and Holcim has been given approval by the European Commission.

Under competition rules, both companies had been required to relinquish a range of global assets – leading to several months of extended negotiations over the proposals.

On its scheduled completion next year, the venture would create what is believed to be the world’s largest cement group. Its combined portfolio would be worth a reported €40 billion in annual sales.

The move follows the release of Holcim’s third quarter results revealing a 4.4% year-on-year reduction in profits across the group - which it attributed to “an ongoing challenging market”. These figures came despite an upturn in its US business that had recorded a 47% increase in operating profits.

The proposed merger is subject to the completion of ongoing divestments, with Holcim selling business interests in Hungary, Serbia, Slovakia and the majority of its operations in France.

Beyond Europe, the company must also part with its assets in Canada, Mauritius and Brazil. Meanwhile, Lafarge is in the process of divesting its operations in Germany, France, Romania, the UK, Brazil and the Philippines.

Professor Dr Wolfgang Reitzle, designated chairman of the board of directors and Bruno Lafont, designated CEO of the proposed combined company, issued a joint statement on the venture. They said the two businesses were “firmly on track” for completing the deal in the first half of 2015.

The merger will require the backing of Holcim’s shareholders during a planned consultation in the second quarter of next year. If approved, the combined company would have bases in a total of 90 countries – which they believe would enable greater operating efficiency.

According to a joint statement, the combined venture would bring together a balanced portfolio of global assets. The companies believed that around 20% of revenues would come from within Europe and the remainder from wider global enterprises.

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