Holcim cements Lafarge deal

The world's two biggest cement makers have agreed to join forces.

The world's two biggest cement makers are joining forces. Holcim of Switzerland is set to take over France's Lafarge, offering one of its shares for one Lafarge share and creating a group with combined sales of €39bn.

The new behemoth, which will be domiciled in Switzerland, expects to spend €1bn on the deal and hopes to achieve annual savings of €1.4bn by 2017.

What the commentators said

It's a highly concentrated sector, with just six firms comprising 40% of the global market outside China, and governments buy lots of cement, so they "want to know they are not being diddled". No wonder UBS thinks regulators could take two years to look at this deal.

The firms have offered to sell assets accounting for 10%-15% of sales. These could go to rivals in Europe, giving them a boost, said Lex in the FT. But with 15 regulators in the mix, more sales may be needed, which could end up scuppering a deal.

Still, as Glencore/Xstrata showed, "where there's a will to get a deal done, there's usually a way to buy the watchdogs off, figuratively if not literally", said James Moore in The Independent. And the pair need to join forces.

They have too much capacity because growth from emerging markets hasn't (so far) come through, and both took on a great deal of debt in the go-go years, which has hit profitability.

But another worry for investors should be the deal's structure. Mergers of equals' tend to be "hastily bolted together" with the main jobs assigned for political reasons and not based on merit. They are "rarely satisfactory and never truly equal".

Recommended

Stock market crash? This time it’s (slightly) different
Stockmarkets

Stock market crash? This time it’s (slightly) different

The bears expecting a stock market crash have got it wrong, says Max King.
30 Nov 2022
Best junior stocks and shares ISA platforms
Isas

Best junior stocks and shares ISA platforms

A junior stocks and shares ISA is a great way to save for your child tax-efficiently. But it can be confusing deciding which investment platform to ch…
25 Nov 2022
Share tips of the week – 25 November
Share tips

Share tips of the week – 25 November

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
25 Nov 2022
Investing in a recession: 5 moves investors should make now
Investment strategy

Investing in a recession: 5 moves investors should make now

As we enter a recession, here’s what investors should do with their portfolios.
23 Nov 2022

Most Popular

Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
29 Nov 2022
Best regular savings accounts – November 2022
Savings

Best regular savings accounts – November 2022

You can earn an attractive rate on the best regular savings accounts. We tell you the best on the market to take advantage of right now
29 Nov 2022