Two of the world's largest suppliers of building materials announced plans for a "merger of equals" Monday that would create an industry giant with a combined 32 billion euros ($48 billion Cdn) in annual revenues.
Swiss-based Holcim and its French counterpart, Lafarge, said the new company would be named LafargeHolcim and be headquartered in Switzerland. They said the merger would create the most advanced group in the building materials industry — the two companies are already global leaders in the supply of cement, crushed stone, sand and gravel.
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 Soiron told reporters in Paris.
Holdings in Canada
Lafarge Canada Inc. operates a research facility in Montreal and a plant in Richmond, B.C., and has extensive operations in Quebec. Power Corp. is a stakeholder in the company. Holcim has two cement and construction divisions in Canada — Dufferin in Ontario and Demix in Quebec.
Canada's Competition Bureau would have to approve the merger, but would be just one of several regulatory agencies around the world to oversee the deal.
Anti-trust concerns, especially in Europe, are expected to be expressed by regulators. The buildings materials giant may be forced to sell some of its holdings as a result.
The combined entity has a market value estimated at 40 billion euros ($60 billion) based on their share prices Friday before news of the deal was announced. LafargeHolcim will dwarf the next largest cement makers, Cemex of Mexico and Heidelberg Cement of Germany.
In Monday trading, shares of Lafarge shot up 2.7 per cent to 65.80 euros, while Holcim rose 1.7 per cent to 81.55 Swiss francs.
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 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 three 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.