Europe’s two largest cement companies Holcim and Lafarge have rescued a stumbling €41bn merger by reconciling differences over financial terms and management that nearly caused the collapse of one of the biggest deals in recent years.
The agreement ends several days of intense negotiations to salvage a tie-up aimed at creating enormous cost savings and a powerhouse in the cement and crushed rock industry.
What was initially agreed as a one-for-one share deal when it was announced last April will now be adjusted in favour of Holcim, after the Swiss company outperformed its French rival financially and saw the relative value of its shares enhanced by the strengthening of the Swiss franc.
Under the new arrangement, which could be disclosed as soon as Friday, Holcim will pay about 0.90 of its shares for each one in Lafarge, people familiar with the matter said.
In addition, Bruno Lafont, chief executive of Lafarge, is now set to become co-chairman of the combined group rather than its new head.
As the two companies have worked on integration matters, Holcim’s senior management has grown concerned in recent months over the 58-year-old Frenchman’s ability to meld two distinct business cultures and to deliver on the €1.4bn in annual cost savings promised by the two companies.
He will share the chairman role of the enlarged entity with Wolfgang Reitzle, Holcim chairman.
A new candidate to lead the group is not expected to be named on Friday, the people familiar with the situation added.
Private talks to salvage the €41bn merger were thrust into the spotlight on Monday after Holcim said the deal to create the world’s biggest cement company could “not be pursued in its present form”.
The Swiss group, whose value has surged since the deal was agreed last April, wanted its shareholders to get a bigger stake in the merged entity. They also protested the appointment of Mr Lafont as the head of the new company.
However, large shareholders on both sides remained supportive of the deal even as problems surfaced — motivated in part by the large cost savings promised.
In spite of the uncertainty in recent days, shareholders in Irish cement company CRH on Thursday rubber-stamped a €6.5bn deal to buy production facilities Holcim and Lafarge are selling to satisfy anti-trust rules.
After falling sharply on Monday, shares in Holcim recovered to SFr75.80 by the close on Thursday, marginally above their level at the end of last week. Lafarge shares, which also fell sharply on Monday, pared some losses by Thursday’s close, to €62.30.
No comments:
Post a Comment