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Global cement market leader Holcim and second-placed Lafarge plan to merge by next year, the Swiss and French companies announced on Monday.
The new LafargeHolcim company would be the biggest company in the cement, concrete and gravel sectors, they said.
The firms plan to swap shares at a ratio of one Holcim share for one Lafarge share, forming a new company that is to be based in Switzerland.
The merger is expected to create “enhanced performance through incremental synergies totalling more than CHF 1.7billion/ Euro 1.4 billion ($1.9 billion) on a full run-rate basis phased in over three years with one-third in year one,” Holcim said online.
In order to streamline the new company, Lafarge and Holcim plan to shed some of their operations in what they called a “pro-active divestment process.”
PTI adds: The proposed merger between Holcim and Lafarge will create the world’s largest cement, concrete and aggregates company with a presence in 90 countries, although no nation will account for more than 10 per cent of the combined revenues.
Holcim and Lafarge, with combined sales of 32 billion euro, said the merger plan was unanimously approved by their boards and fully supported by their core shareholders.
“The proposed merger would enable optimised capital allocation across the expanded footprint and strong cash-flow generation and a robust balance sheet that will provide financial strength,” the two firms said in a joint statement.
The new entity, LafargeHolcim, will be headquartered in Switzerland and will have Holcim’s Chairman designate Wolfgang Reitzle as Group Chairman. Bruno Lafont, Lafarge’s Chief Executive, will take over as the CEO of the combined group.
“The new global company would deliver compelling benefits for all stakeholders. LafargeHolcim would be in the best position to contribute to addressing the challenges of urbanisation — affordable housing, urban sprawl and transport,” it said.
LafargeHolcim will have an enhanced presence in the global building materials sector with the top position worldwide across cement, concrete and aggregates and new opportunities to optimise production and commercial networks, it added.
“After a strategic optimisation of the portfolio through a pro-active divestment process, in anticipation of regulatory requirements, LafargeHolcim would occupy complementary positions,” it said.
LafargeHolcim will be listed on the SIX in Zurich and Euronext Paris.
The board will be composed with equal numbers of Lafarge and Holcim directors and through an efficient distribution of central corporate functions in France and Switzerland.
“The proposed combination would be structured as a public offer filed by Holcim for all outstanding shares of Lafarge on the basis of a 1 for 1 exchange ratio with an agreement to have equal dividends on a per share basis between announcement and completion,” it said.
The deal is likely to be closed in the first half of 2015.
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