Holcim, Lafarge agree to merger to create cement giant
By Natalie Huet and Caroline Copley
PARIS/ZURICH (Reuters) - Holcim HOLN.VX of Switzerland unveiled a deal to buy France's Lafarge LAFP.PA on Monday to create the world's biggest cement maker, with $44 billion of annual sales, and launch asset sales worldwide to steer it over antitrust hurdles.
The partners billed the industry's biggest ever tie-up as a merger of equals, under which Lafarge shareholders receive one Holcim share for every Lafarge held and Holcim investors end up with 53 percent of the new group. The merged business will be based in Switzerland and listed in Zurich and Paris.
As the two biggest listed companies in the sector already, with operations in 90 countries, the pair expect to face antitrust scrutiny in 15 jurisdictions and to sell some 5 billion euros ($6.85 billion) of assets to persuade competition regulators to allow the creation of LafargeHolcim.
The deal will give the group a market value of close to $60 billion. It will help it slash costs, trim debt and better cope with the soaring energy prices, tougher competition and weaker demand that have hurt the sector since the 2008 economic crisis.
Analysts said it would bring together Holcim's strength in marketing with Lafarge's innovative edge and could generate substantial savings - provided that necessary asset sales, which may take several years, do not deplete that potential too much.
"The road to merger clearance will be a long, complex and uncertain one," said David Anderson at the Berwin Leighton Paisner law firm.
Antitrust enforcers will take a hard look at the deal because of a history of collusion in the cement industry, said Herbert Hovenkamp, who teaches antitrust law at the University of Iowa's College of Law.
Lafarge was fined by European antitrust regulators for price-fixing in 1994 and in 2002. The European Commission opened another investigation into several cement producers in December 2010, and Lafarge and Holcim are among companies being probed. Continued...