Cement Giants Unveil Billions in Asset Disposals

Tuesday, July 8th, 2014
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Cement giants Holcim and Lafarge have unveiled a series of targets for asset sales across Europe and elsewhere in a bid to persuade regulators to allow the two companies to merge and create the biggest cement outfit in the world.

On Monday, the two companies announced they would be prepared to hive off operations across Austria, France, Germany, Hungary, Romania, Serbia, the United Kingdom, Canada and Mauritius (see below) in what media reports suggest represents around ten percent of the companies’ combined annual revenues in order to appease regulators in around fifteen countries with regard to their plans announced on April 7 to create the world’s biggest supplier of cement, concrete and aggregates with annual sales of around 32 billion euros ($A46.47 billion) across 90 countries and profits (EBITDA) of around 6.5 billion euros.

Also under consideration are divestures in The Philippines, whilst planned divestments in Brazil are set to be filed with the regulator in that country.

In a statement, the two companies said the divestment process would be carried out in consultation with unions and regulators, and that Europe would account for around 20 percent of combined group revenue once the disposals were complete.

“Both companies will continue to consider whether divestments would be necessary where there might be overlaps or depending on regulatory requirements,” the statement said.

“These proposed divestments are subject to review and further discussions with the regulatory authorities and to the agreement of our business partners when relevant.”

According to a Reuters report, the companies have received expressions of interest from around 50 buyers and were shortly about to commence negotiations.

No asset sales are listed for Australia as Lafarge does not operate in our country.

Should authorisation be granted, the two companies hope to complete the merger in the first half of next year.

Assets earmarked for disposal:

(1)    Europe

• Austria: Lafarge’s Mannersdorf cement plant

• France: Holcim’s assets in metropolitan France, except for its Altkirch cement plant and aggregates and readymix sites in the Haut-Rhin market; Lafarge’s assets on Reunion Island, except for its shareholding in Ciments de Bourbon

• Germany: Lafarge’s assets

• Hungary: Holcim’s operating assets

• Romania: Lafarge’s assets

• Serbia: Holcim’s assets

• UK: Lafarge Tarmac assets with the possible exception of one cement plant

(2)    Rest of World:

• Canada: Holcim’s assets

• Mauritius: Holcim’s assets

• The Philippines: the associated companies of Lafarge and Holcim (Lafarge Republic Inc. – LRI and Holcim Philippines Inc.) are exploring the combination of their businesses other than LRI’s Bulacan, Norzagaray, and Iligan plants which are considered to be divested as part of such combination.

• Brazil: Holcim and Lafarge will file soon with the Brazilian regulator, CADE, and propose a comprehensive and high quality package of divestments.

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