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Strategies & Market Trends : Speculating in Takeover Targets
ULBI 9.650-1.5%2:09 PM EDT

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To: Glenn Petersen who wrote (3673)4/7/2014 3:42:26 AM
From: Glenn Petersen   of 7058
 
Cement Makers Holcim and Lafarge Agree to Merge

By DAVID JOLLY
New York Times
April 7, 2014, 3:32 am

PARIS — Holcim and Lafarge, the world’s two biggest cement companies, said on Monday that they had agreed to a merger of equals to help them better adapt to competition on the global stage.

The combination will “the most advanced group in the building materials industry,” the two companies said in a joint statement, following a meeting Saturday in which both boards unanimously backed a deal.

The creation of the new company, to be called LafargeHolcim, “is a once in a lifetime opportunity,” Rolf Soiron, the Holcim chairman, said in a statement, allowing the companies to offer a wider range of products to customers and “more sustainability and enhanced returns to shareholders.”

In morning trading, shares of Lafarge rose about 4 percent on the Paris bourse, while Holcim increased more than 5 percent in Zurich.

Holcim, based in Jona, Switzerland, near Zurich, and Lafarge, which is based in Paris, rank among the market leaders in cement and related products like stone, gravel and sand. Last year they had combined sales of about $44 billion and adjusted pretax income of about $8.9 billion, and had combined payroll of about 135,000 employees.

The merger, projected to close in the first half of 2015, would give the two companies a chance to shed overlapping assets in the moribund European market and to expand in faster-growing regions overseas where lower-cost competitors are threatening. LafargeHolcim would be active in 90 countries, they said, with no single country accounting for more than 10 percent of their combined revenues.

The deal is subject to shareholder approval and, perhaps more importantly in the case of such large players, must pass muster with antitrust authorities in numerous jurisdictions around the world where they currently compete. Holcim is already facing regulatory scrutiny in the European Union for deals with Cemex, the Mexican cement maker.

Looking to the regulatory slog ahead, the companies said they anticipated gains of 10 percent to 15 percent of their global adjusted pretax income from strategically divesting problematic assets. Even with a proactive approach, antitrust lawyers say completion of a merger could be years away.

Wolfgang Reitzle, currently a board member at Holicm, would serve as chairman of the new company’s board, while Bruno Lafont, chief executive of Lafarge, would be chief executive, with a 14 member board made up of seven members from each company.

The deal is structured as a “public exchange offer,” initiated by Holcim, in which the shares tendered by a Lafarge shareholder would be traded for an equivalent number of new Holcim shares.

The company is to be based in Switzerland, with the shares listed on the both the Zurich and Paris bourses.

dealbook.nytimes.com
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