(814) 466-7134

Welcome to the Alpine Blog

Holcim-Lafarge Look to Solidify Cement Industry Position with Merger

Posted by Ryan Leech

Jun 25, 2014 9:30:00 AM

Holcim-Lafarge_Solidify_Cement_Industry_Position_with_Merger

The cement industry felt its landscape shift on April 4, 2014 when major companies Holcim and Lafarge announced their plan for a $50 billion merger.

The new company will be called Holcim-Lafarge and set up their headquarters in Switzerland, but will also be listed in both Zurich and Paris.

The merger will be positioned as a merger of equals. There will be no cash outflow at all in the deal with everything taking place through stock. Every Lafarge shareholder will receive one Holcim share for every Lafarge share they own, and Holcim shareholders will own 53% of the group.

The merging groups believe their cooperation to be strong synergistic move that will make them more flexible to meet market demands in an efficient manner. They expect to save close to $2 billion in their operating costs by becoming more efficient and shaving costs.

The two competing companies will now combine to form a global presence that reaches into 90 countries and consists of over 136,000 employees.

The merger announcement came on the heels of just under three months of negotiations. If the merger is approved, it would have a dramatic influence on the future of cement production and fundamentally transform the industry.

The impact of this unprecedented merger will impact not only the cement industry, but also related industries along the supply chain such as aggregate production and the ready mix materials.

To comply with the necessary requirements for an approved merger, the companies will have to divest 10-15% of their assets.

Holcim-Lafarge plan to address at least 15 competition authorities worldwide.

The company not only faces the complication of having to sell off assets, but also needing to be selective about who acquires those assets. Since the market is so concentrated, there will be significant interest over how the assets are split up among interested investors.

The plan is for most of the divestment to involve European assets where the companies experience the majority of their overlap. The companies promised to sell assets that create €5 billion, or $6.8 billion, revenue annually in an attempt to appease anti-trust concerns.

To handle selling off the large amount of assets, Holcim-Lafarge is creating a divestment committee to handle the interest from potential investors.

In addition to selling off assets and making sure they go to appropriate investors to maintain competitive balance, the European Commission already has an investigation open against, Holcim, Lafarge, and 6 other companies over allegations that they operated as a cartel in the cement and cement-based products market.

The investigation officially opened in 2010 and the risk of heavy fines will surely scare away some potential investors.

The size and complexity of this deal, along with the cartel allegations, means it will be a lengthy process to see if the merger is approved. Right now, the projection is that the merger will be finalized in early 2015.

The movements that take place over the ensuing months will have a distinct impact on the many different construction industries that use or are related to cement products.


Find out everything you need to know about rock grinding with a cutterhead

Topics: Construction

About this blog

This blog is a resource for research, how-to's, and general news regarding rock grinders, transverse cutter heads, roadheaders, and alternatives to hydraulic hammers. 

The Ultimate guide to Rock Grinding

Subscribe for Regular Email Updates

Recent Posts