Holcim, Lafarge to merge into construction material giant
Basel, Switzerland - Construction material groups Holcim and Lafarge said Monday that they plan to merge to become the global leader in cement, concrete and gravel.
Holcim, the Switzerland-based cement market leader, and runner-up Lafarge of France expect their LafargeHolcim merger will create synergies worth more than 1.4 billion euros (1.9 billion dollars)within three years.
The construction sector has been suffering from low demand, which has created production over capacities, as well as pressure to cut costs.
"Here we have come up with the ways and means to once again focus ongrowth," Holcim chief executive Rolf Soiron said at a press conference in Zurich.
In order to streamline the new company, Lafarge and Holcim plan to sell some of their operations in what they called a "pro-active divestment process.
"This process to reduce overlapping production operations is to start immediately, before the planned closure of the merger in the first half of next year. The company parts to be divested would correspond to sales worth 5 billion euros, out of 31.6 billion euros of sales that the two companies made in total last year.
Holcim and Lafarge hold equal shares of the European and North American markets, and two thirds of the divestments are to take placein Europe.
In emerging markets, Holcim is more dominant in Latin America and Asia, while Lafarge has bigger sales in Africa and the Middle East.
Profitability would increase by merging procurement, sales, logistics and corporate infrastructure, as well as by making better use of production facilities, the companies said.
"The impact of this deal in France on jobs will be very small," Lafarge chief executive Bruno Lafont said in Zurich.
He added that some corporate jobs would be lost. Factories to be sold would continue operating under new ownership. Lafont is set to become chief executive of LafargeHolcim.
