Lafarge merger has 2016 end date

The newly created European cement giant, LafargeHolcim formally launched yesterday, with the immediately stated aims of full merger integration by the end of next year, and cost savings of €1.4bn being achieved by the end of 2018.

“As expected, the group will now focus on five areas in the first integration phase: Synergies: delivering on €1.4bn (CHF 1.7bn) synergy target within three years; capital allocation: rigorous approach to capital allocation and overall reduction of capital spending; commercial transformation: creating differentiation through innovative products and solutions; integration: creating one new group and culture; health and safety: putting health and safety at the centre of the organisation,” noted Davy Stockbrokers.

“By the end of 2016 we will have completed the integration,” LafargeHolcim chief executive Eric Olsen told a news conference in Zurich yesterday, upon the new entity listing on Zurich’s SIX exchange and the Euronext in Paris.

“Within 1,000 days we will realise the full synergy potential,” he added. Mr Olsen said the conclusion of the deal marks the company entering a new era of clear leadership in the building materials industry. The new entity will effectively dwarf competition like Heidelberg and Cemex and will have combined sales of €32bn, with operations stretching across 90 countries.

The aspect of the mega-merger, relating to Irish building materials group CRH — in which the Dublin-headquartered business is buying certain assets that were offloaded to make way for the deal, for €6.5bn— is due to conclude next month; after which CRH will be the third biggest player in the industry, on a global basis.

Meanwhile, CRH is being tipped to benefit greatly from propoals to boost funding for US road infrastructure; the Republican Party in the House of Representatives proposing an $8.1bn plan that would fund US highway constrution through to the end of this year. The current extension to highway funding runs to the end of this month, at which time current funding will be largely depleted.

“The Republicans appear increasingly serious about putting in place a multi-year highway bill. This has the potential to be a major positive for CRH, the single largest producer of asphalt for highway construction in the US,” according to Robert Gardiner of Davy Stockbrokers. “The proposal has come from the chairs of two important committees in the House of Representatives, suggesting that its passage through Congress is likely,” he added.

Additional reporting by Reuters.