The second-largest shareholder in Swiss cement maker, Holcim, has said it supports the company’s planned merger with France’s Lafarge.
Irish building materials and concrete producer CRH’s €6.5bn shareholder- and EU-approved takeover of certain assets due to be offloaded as part of the Holcim-Lafarge merger rests on formal backing from Holcim’s investors.
“Having analysed all advantages and disadvantages of a possible creation of the biggest global construction materials player, we think that the prospective of the development of the combined company is very positive, so we will support the merger,” Eurocement Holding said in a statement.
Eurocement, which has a 10.8% stake in Holcim, said it intends to keep actively participating in the work of the merged company. The backing from Eurocement is a boost to Zurich-based Holcim as it seeks to win the support of two thirds of investors at a shareholder meeting on May 8 in order to approve a fundraising to pay for the merger. Holcim has said it sees costs relating to the merger amounting to €130m-€150m.
Eurocement-owner Filaret Galchev had earlier expressed concerns about the terms of the Holcim-Lafarge deal, but on April 16, Eurocement said it would nominate Galchev for a position on the board of the combined group — a sign that Eurocement was softening its resistance to the merger.
Holcim yesterday reported a jump in first-quarter net profit, helped by asset sales, while Lafarge posted a better-than-expected rise in operating profit. Shares in both companies climbed after the results, as analysts said the numbers boded well ahead of the Holcim shareholder meeting next week.
Analysts focused on Lafarge’s operating profit beating forecasts with a 17% rise to €403m and the French company being on track to deliver cost savings targets for the year.
“Overall, a better than expected performance from Lafarge,” Bernstein analysts said in an investment note. “This slight reversal of fortunes compared to Holcim… should be good for the balance of the shareholder vote.”
The two companies unveiled a “merger of equals” last April to create the world’s biggest cement maker, but terms were revised in March after shareholders in the Swiss company complained they were getting a raw deal.
Holcim investors had observed the relative performance of the two companies diverge since the merger was announced. The rise in the Swiss franc against the euro and worries about the proposed management structure were other factors prompting its shareholders to push for a better deal.
Holcim reported a net profit of 310m francs, up from 80m a year earlier.
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