Switzerland’s Holcim has unveiled a deal to buy France’s Lafarge to create the world’s biggest cement maker, with $44 billion of annual sales, and spark a raft of asset sales worldwide to steer it through antitrust rules.
The partners billed the cement, concrete and aggregates 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 per cent of the 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 pairing expects to face antitrust scrutiny in 15 jurisdictions, and to sell some 5bn euros of assets to persuade competition regulators to allow the deal.
Lafarge has a number of concrete plants in Yorkshire; Holcim has sand and gravel mining operations in North Yorkshire.
Analysts said the company could have a market share in excess of 50 per cent in some areas, and that even in countries such as the United States where it would be smaller, monopoly authorities are likely to get involved.
“We believe the final execution ... could take a long time to get through, with all monopoly issues which will occur, and we would not exclude that it might finally fail,” said Helvea analyst Patrick Appenzeller.
News of talks for the deal, creating a group with a combined market value of just under $60bn, broke on Friday and agreement was struck over the weekend.
The deal will help the companies slash costs, trim debt and better cope with the soaring energy prices, tough competition and weaker demand that have hurt the sector since the 2008 economic crisis.
“The new group will offer higher growth and low risk, thus creating more value,” said Lafarge CEO Bruno Lafont, who will become head of LafargeHolcim.