SLOVAKIA: Lafarge, Holcim Offer Selling Slovakia Unit for Merger

Holcim Ltd. (HOLN) and Lafarge SA (LG) officially notified the European Union of their merger, offering to sell operations in Slovakia as they seek approval of their plan to create the world’s largest cement maker.

The two companies held “constructive” pre-notification discussions with the European Commission, they said in a joint statement. As a result of the talks they’ve decided to keep a Lafarge plant in Austria and to sell Holcim’s operations in Slovakia. Other plants already earmarked for divestment include sites in France, Germany, the U.K. and Romania.

“Both companies will continue to consider whether further divestments would be necessary in areas where there are overlaps or to satisfy regulatory requirements,” they said.

A merger of the Swiss and French companies would combine cement- and crushed-rock operations with $40 billion in annual revenue. Divestments are weighted toward Europe, to cut exposure of both companies to the slower-growing region. The assets for sale represent about 12 percent of the combined sales of Zurich-based Holcim and Paris-based Lafarge, the companies said today.

The sale process is proceeding “very well,” Lafarge Chief Executive Officer Bruno Lafont said today on a conference call. “We have received many marks of interest” and both companies are confident that assets sales will be completed within the merger timeframe, he said.

Getting Clearance

The notification to the EU wraps up 20 filings by Lafarge and Holcim to get clearance for their planned merger, Holcim CEO Bernard Fontana said. Russia, Ukraine, Turkey, Morocco, Kenya,South Africa and Singapore have already approved the merger, and talks with other regulators such as the U.S. are going on, he said.

When asked whether the companies need to sell assets in China or India to get local approval, Fontana said that those disposals would only be “marginal” if they were needed.

Under the EU’s merger-review process, most deals are cleared at the first hurdle. The commission can open an in-depth probe if the transaction raises competition concerns.

Bloomberg News reported Sept. 18 that Holcim and Lafarge were aiming to iron out possible EU concerns over the merged company’s market power before officially notifying, in a bid to obtain speedier final approval.

The Holcim CEO declined to say whether the EU is likely to rule on the merger through a so-called phase one review that lasts between 25 and 35 days, or through a longer, phase two, review that lasts an extra 90 to 105 days. He said he’s “confident in any case” that the process will allow the companies to complete the merger within the first half of next year.

With assets in Europe that total about $12 billion in sales, the merger approval of Holcim and Lafarge will be overseen by Margrethe Vestager, Denmark’s former minister of Economics & Interior who starts as EU competition commissioner Nov. 1.