Cement merger a step closer

Shareholders of Swiss cement maker Holcim paved the way for the planned merger with French rival Lafarge SA by approving a capital increase needed for the deal.

Almost 94% of investors present at an extraordinary general meeting approved the move yesterday. Holcim had needed two-thirds of its shareholders to back the capital hike and create the world’s biggest cement maker with a market value of more than $46bn (€40.9bn).

The companies tweaked the original merger agreement in recent weeks to win over Holcim investors who were unhappy about the performance of Lafarge since the deal was agreed last year.

The Swiss company will now have a bigger stake in the new entity, and the cement makers also appointed Eric Olsen to lead their combined operation after Holcim shareholders opposed Lafarge CEO Bruno Lafont as head of the new group.

Holcim’s second-biggest shareholder Eurocement Holding AG, which previously opposed the planned merger, said last month it now supports the deal as it regards the development of the combined company as “very positive”.

On April 30, Holcim reported an almost four-fold increase in first-quarter net income while Lafarge’s operating profit in that period beat analyst estimates.

Thomas Schmidheiny, Holcim’s largest shareholder and the billionaire co-architect of the merger, supported the tie-up from the beginning. Corporate governance adviser International Shareholder Services recommended last month that investors back the deal.

Holcim shares gained 1.7% in Zurich trading while Lafarge gained 0.8% in Paris.

Holcim and Lafarge have predicted the merger will lead to cost savings of €1.4bn annually.