Uncertainty hung over CRH’s planned €6.5 billion purchase of assets from Holcim and Lafarge last night as the Swiss and French cement giants held last- minute talks aimed at saving their planned merger.
CRH shareholders were due to meet at 9.30am this morning at Dublin’s Clyde Court to rubber-stamp the deal, which would see Ireland’s largest listed company buying assets left over from the proposed €40 billion merger of its peers.
The CRH deal, one of the largest in Irish corporate history, can only go ahead, if Holcim and Lafarge strike a deal to rescue their proposed merger, with an announcement expected this morning ahead of the Dublin meeting.
The board of Holcim was due to meet last night to decide if the deal could be salvaged, after it hit a snag on Monday when Holcim said it was not happy with the terms.
The two sides are closer to resolving their differences over the role that Bruno Lafont, Lafarge’s chief executive, would have at the enlarged group as well as a new share exchange ratio for what was previously a one-for-one stock deal. However, there was no guarantee that the merger, announced last April, would survive.
One solution being discussed is to appoint Mr Lafont (58) as co-chairman of the combined company, according to people close to the situation, alongside Wolfgang Reitzle, Holcim’s current chairman.
As well as a co-chair arrangement, the boards are discussing other possible titles for Mr Lafont such as group president.
Merger terms
The gap between the companies’ share prices has widened since the original merger terms were struck last April, on the back of a weaker performance by Lafarge compared to Holcim, and the lifting of the cap on the Swiss franc in January.
That has led Holcim to push for revised merger terms and the two sides have agreed on a new share-exchange ratio, one person said.
The concerns about Mr Lafont’s role have flared in recent weeks as a major stumbling block to the proposed merger – intended to create the world’s largest cement company by sales.
After working with Mr Lafont on integration issues, Holcim’s board and its senior managers began to lose confidence in the Frenchman’s ability to both deliver on ambitious cost saving targets and bring together two distinct business cultures, according to people familiar with the situation. The companies have been trying since at least last week to resolve the issues and only acknowledged them publicly on Monday.
Holcim and Lafarge are disposing of those assets to CRH to secure approval from EU regulators for their merger. Shares in CRH rose strongly yesterday after also dropping earlier in the week. Both Holcim and Lafarge declined to comment. – (Additional reporting: Financial Times service)
