ZURICH/PARIS (Reuters) - Lafarge LAFP.PA and Holcim HOLN.VX have picked Lafarge insider Eric Olsen as chief executive of their combined company, potentially opening the way for the two cement groups to clinch their $40 billion merger, if shareholders back it next month.
Olsen, a 16-year veteran at Paris-based Lafarge, will take on the challenge of knitting together the two companies to deliver a promised 1.4 billion euros ($1.50 billion) in cost savings.
He said he was ready for the task of extracting these benefits from the merger and of forging a coherent new company from the Swiss and French groups.
“I see my role not only as the operational leader but also as the integrator of cultures,” he said at a press conference on Thursday.
The CEO role was a major sticking point when the tie-up between the French and Swiss companies came close to collapse in March. The two groups eventually agreed new terms aimed at satisfying discontented Holcim shareholders, but the top job remained a problem.
Holcim’s second-biggest shareholder Russia’s Eurocement and third-biggest Harris Associates have expressed misgivings about the deal, and have yet to speak publicly on Olsen’s appointment.
Shares in Holcim rose 3.6 percent and Lafarge 4.7 percent at 1312 GMT in response to Olsen’s appointment.
Since the deal was announced last April, Holcim investors had watched the companies’ relative business performances diverge. A stronger Swiss franc also became a factor, along with questions over the management style and record of Bruno Lafont, Lafarge CEO, who was to be CEO of the merged company.
The two groups have agreed that Lafont will become co-chairman with Holcim’s Wolfgang Reitzle instead of CEO as initially planned.
Olsen was backed by the boards of both companies as CEO after Holcim’s board met on Wednesday.
An American and French citizen, Olsen, 51, joined Lafarge in 1999 and now works as its executive vice-president for operations, responsible for countries including France, the United States, Brazil and Egypt.
He has run Lafarge’s North American business, which was public at one time and has experience of communicating with investors. But he has never been in charge of a company the size of the combined Lafarge and Holcim. These two groups have more than 120,000 employees combined, according to their websites.
Jefferies analyst Mike Betts predicted that Olsen would be well regarded once investors got to know him, citing his track record at Lafarge North America.
“He was a strong operator, presenter and team player, who well understood the needs of the financial markets,” Betts wrote in a note.
Holcim chairman Reitzle remained confident about next month’s shareholder vote on the deal on May 8 but said the company needed to do more to convince shareholders of the merger’s advantages beforehand.
“We’re confident that we will win sufficient votes for the deal,” Reitzle said.
($1 = 0.9307 euros)
Additional reporting by Alice Baghdjian; Writing by Joshua Franklin and Alice Baghdjian; Editing by Jane Merriman