THE WORLD’S two largest cement makers, France’s Lafarge and Switzerland’s Holcim, are in advanced talks to merge into a company with a stock market value of over $50bn in what would be the industry’s biggest ever tie-up.
The discussions, which are likely to draw close scrutiny from European competition watchdogs, are “based on principles consistent with a merger of equals”, the two companies said in identical statements.
They said no agreement had yet been reached and that there was no guarantee of a deal, but there was a “strong complementarity” and “cultural proximity” between the groups.
A merger would help Lafarge and Holcim slash costs, trim debt and better cope with the soaring energy prices and weaker demand that have hurt the sector since the 2008 economic crisis.
But any deal is likely to draw scrutiny from European competition watchdogs, as a Lafarge-Holcim entity would have a dominant position in both Europe and the United States. Regulators would probably require the companies to shed cement plants and distribution facilities before approving any merger.
Lafarge has a number of concrete plants in Yorkshire; Holcim has sand and gravel mining operations in North Yorkshire.
Such a merger would create a giant with combined sales of over $40bn and would be Europe’s biggest tie-up this year.
Lafarge’s cement helped build the Suez Canal in the 1860s, and it employs around 65,000 workers in 64 countries.