ZURICH—Holcim Ltd. and Lafarge SA on Wednesday officially
launched their new combined building materials company after
overcoming a series of regulatory hurdles and challenges over the
terms of the merger, which was first announced a year ago.
Shares in LafargeHolcim Ltd. made their debut on the Swiss and
Paris stock exchanges on Tuesday, with a market capitalization of
roughly 41 billion Swiss francs ($43.2 billion).
Chief Executive Eric Olsen said the company remained committed
to delivering annual savings of €1.4 billion ($1.54 billion) within
three years and would also concentrate on integrating the two
companies, reducing capital spending, and creating new products and
services.
"This event marks our entry into a new era," said Mr. Olsen. "We
are now clearly the leader of the building materials industry."
The new company has combined sales of 33 billion francs and
operations in 90 countries, dwarfing rival cement-makers such as
Germany's HeidelbergCement AG and Mexico's Cemex SAB de CV.
Mr. Olsen said LafargeHolcim had overcome what seemed like
"insurmountable" obstacles to complete its merger that was into
doubt earlier this year following a disagreement over the exchange
ratio and the leadership of the combined company.
"Indeed there were many roadblocks and hurdles along the way
that we had to overcome," said Mr. Olsen, a 51-year-old
American-born executive who also holds French citizenship.
As well as convincing shareholders to back the merger, both
companies also had to shed plants around the world to get approval
from regulators.
Jona, Switzerland-based Holcim finally received the go-ahead
earlier this month to create the new company after enough Lafarge
shareholders offered their stock and the French financial regulator
approved the deal.
LafargeHolcim has been established to pivot the two companies
away from developed markets toward faster growing economies in
Africa and Asia where demand for cement is growing faster.
Mr. Olsen said the new company would have around 60% of its
sales in emerging markets, but expected the proportion to rise in
future.
The wider global spread would enable the LafargeHolcim to
weather downturns in individual markets such as China, he said at a
news conference.
The combined company has also begun looking where it can reduce
costs, particularly in procurement. Both companies combined spend
roughly €16 billion a year on fuel, raw materials and equipment, a
bill it is aiming to reduce by €340 million.
A team of 200 experts has begun working to see how the cement
plants can become more efficient. The first results of the merger
will be seen within 300 days, Mr. Olsen said.
Holcim and Lafarge will present their half-year earnings as
stand-alone companies later this month and report their first
results as a combined company at the nine-month stage later this
year.
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