Lafarge-Holcim "merger of equals"results in industry giant

Two of the world’s largest suppliers of building materials announced plans for a “merger of equals” recently that would create an industry giant with a combined 32 billion euros ($44 billion) in annual revenues from around the world, including their cement and concrete businesses in Canada.

GENEVA

Swiss-based Holcim and its French counterpart, Lafarge, said the new company would be named LafargeHolcim and be headquartered in Switzerland.

The two companies, already global leaders in the supply of cement, crushed stone, sand and gravel, said the merger would create the most advanced group in the building materials industry.

Lafarge is partially owned by a subsidiary of Power Corp., whose chairman and co-CEO, Paul Desmarais Jr., is a member of the Lafarge board of directors.

Lafarge is Canada’s largest producer of cement and concrete products, but also supplies a wide range of construction materials such as asphalt for road construction and gypsum drywall for interior walls in homes and offices. It has more than 360 sites across Canada employing about 6,000 people.

Holcim’s Canadian operations, which include the former St. Lawrence Cement that it acquired in 2009, are concentrated in Ontario and Quebec and employ about 3,000 people. Its divisions include Dufferin Concrete and Demix Construction

The plan is for Holcim board member Wolfgang Reitzle to serve as chairman of the merged entity, while Lafarge’s chairman and chief executive Bruno Lafont becomes its CEO. Seven people from each company will be represented on the board.

Reitzle, a German mechanical engineer, also has extensive experience in the automotive industry, while Lafont, a French business executive, has been with Lafarge for more than 30 years and is also a special adviser to the mayor of Chongqing, a Chinese city of 32 million.

“This merger of equals is a unique opportunity in the history of our companies,” Holcim chairman Rolf Soirin told reporters in Paris.

Lafont emphasized the two companies’ complementary geography. While Lafarge has greater presence in mature North American and European markets, Holcim has a far larger reach in the faster growing markets of Asia and Latin America. Holcim, based near Zurich, employs 71,000 people worldwide and has production sites in around 70 countries. Paris-based Lafarge, meanwhile, employs 65,000 people and operates in 64 countries.

The companies said that by combining they would “be uniquely positioned in 90 countries around the world with a balanced exposure to both developed and high-growth markets.” They said they plan to sell off businesses in developed markets representing about 3 billion euros of revenue and businesses in developing markets worth about 1.5 billion euros of revenue.

The deal is expected to close in the first half of next year, subject to regulatory approval.