Second Holcim backer shows Lafarge concerns

The Russian businessman Filaret Galchev, who owns a 10.8% stake in Swiss building materials group Holcim, via Eurocement Holding, has rejected the merger offer that France’s Lafarge has made for Holcim, a Swiss newspaper reported.

Second Holcim backer shows Lafarge concerns

Galchev, Holcim’s second-largest shareholder, views the offer as “not satisfactory and half-baked”, reported the Sonntagszeitung yesterday, citing an unnamed source described as a Galchev confidant.

Galchev believes the exchange ratio offered by Lafarge, at 1:0.9 shares, still fails to compensate Holcim shareholders adequately, and that a decision needs to be made about who will lead any combined firm, the paper wrote.

Holcim and Lafarge have agreed a new share-swap ratio that was more advantageous to Holcim investors and also decided Lafarge boss Bruno Lafont would no longer become CEO of what would become the world’s largest cement firm, with annual sales of over €30bn. However, an alternative has yet to be named.

Yesterday’s news follows on from Friday, when another leading Holcim shareholder expressed concern over who will lead the enlarged group, saying they wanted to know before deciding whether to formally back a deal or not.

Uncertainty over the CEO had left a central question in the deal unresolved, said David Herro, chief investment officer for international equities at Harris Associates which owns 3.19% of Holcim’s shares.

“Before we decide on the transaction we first want to know who will be put forward for this post,” Herro told Swiss business newspaper Finanz und Wirtschaft on Friday.

He added that it would be an attractive deal if the two companies are integrated smoothly and the business is led prudently. Holcim declined to comment on those remarks.

A source close to the situation told Reuters, previously, that the plan was for a new CEO candidate to be named before Holcim’s extraordinary shareholder meeting on May 8, when investors will vote on whether to approve the merger.

The latest uncertainty means Dublin-based cement and building materials group, CRH must still wait and see if it will truly benefit, as expected, from the deal.

It has agreed to acquire, for a combined €6.5bn, a number of the international assets the Swiss and French firms are required to sell in order to achieve regulatory approval for their merger.

Its shareholders approved its role in this merger, earlier this month, with 99.93% backing an opportunistic acquisition plan that will catapult CRH into becoming the world’s third largest building materials groups.

While CRH continues to work under the assumption that the broader merger will go ahead — thus allowing for its potentially transformational benefit from it, even before the more recent suggestions that the two European giants had reached a revised agreement — CRH chief Albert Manifold said either way, CRH will remain in serious growth mode and that the acquisition of the Holcim and Lafarge assets only form one part of its growth process, rather than represent it in totality.

“It forms an important part of our growth strategy, but it is not the strategy. Our pipeline of acquisitions is quite full at this time,” he said after a recent Dublin EGM.

Reuters (additional reporting, Irish Examiner)

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