Displaying items by tag: Merger
Canada: Ottawa's Competition Bureau has announced that it will look into the US$40bn merger between Lafarge and Holcim, both of which have extensive operations in Canada. Competition Bureau spokeswoman Mélanie Beauchesne reportedly confirmed the news.
In Canada the regulations require that the Competition Bureau must be given advanced notice of a merger if the Canadian assets generate more than US$82m in revenues and when the assets exceed US$400m. In a joint statement earlier in July 2014 Lafarge and Holcim announced plans to sell all of Holcim's assets in Canada to address potential competition regulations in order to merge their businesses.
Lafarge has operations in Quebec, Nova Scotia, Ontario and Western Canada, while Holcim has plants mostly in Quebec and Ontario. Together, Holcim and Lafarge employ some 9000 people in Canada. The divestment of Holcim's Canadian assets will likely have no effect on industry operations, at least in the short term, according to Regan Watts, Lafarge Canada's spokesman.
"It's impossible to say what will happen exactly," said Colacem Canada's CFO, François Gervais. "We simply don't know what's going to happen. There are too many imponderables. But it's business as usual for us." Regarding Holcim's cement plant in Joliette, Quebec, he added, "Would the plant close? That would be very surprising. Will somebody buy it? Most likely. What will be the impact on the market? Well, who can say? I'm not clairvoyant."
UK: Anglo American has announced that it plans to sell its equity in its joint venture project with Lafarge UK. Anglo American plans to use the proceeds of the sale to pay off debt.
Once it owns the entire firm, Lafarge plans to sell it to help it gain approval from competition regulators for its merger with Holcim. Lafarge and Holcim need to shed around Euro5bn in assets to persuade regulators to back the merger. Lafarge and Holcim's merger is expected to be completed in the first half of 2015.
"The sale will be subject to a number of conditions, including the completion of the Lafarge / Holcim merger, the divestment of Lafarge Tarmac being accepted as a suitable remedy, and approval of this sale transaction by the necessary regulators," said Anglo American.
Europe: Lafarge and Holcim have set up a Divestment Committee following the announcement of the planned merger on 7 April 2014, with the aim of taking forward the divestment process. The Committee has drawn up a list of proposed asset disposals to anticipate potential competition authorities' requirements. The announcement represents a major part of the total assets that the two companies aim to divest.
The two companies are proposing the following disposals:
• Austria: Lafarge's Mannersdorf cement plant;
• France: Holcim's assets in metropolitan France, except for its Altkirch cement plant and aggregates and ready-mix 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 assets;
• Romania: Lafarge's assets;
• Serbia: Holcim's assets;
• UK: Lafarge Tarmac assets with the possible exception of one cement plant.
• Canada: Holcim's assets;
• Mauritius: Holcim's assets;
• The Philippines: the associated companies of Lafarge and Holcim (Lafarge Republic Inc 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.
The future LafargeHolcim group will have a significant and balanced industrial base in Europe, enabling it to take advantage of the European economic recovery. Both companies will continue to consider whether divestments would be necessary where there might be overlaps or depending on regulatory requirements.
The proposed divestments are subject to review and further discussions with the regulatory authorities. The divestment process will be carried out in the framework of the relevant social processes and ongoing dialogue with the employee representatives' bodies and will be conducted in parallel to discussions with the competition authorities and potential buyers. The divestment process will be completed subject to the closing of the merger between Holcim and Lafarge.
Find out exactly which cement plants are affected by Holcim and Lafarge's proposed asset divestments in the Global Cement Directory 2014, available here.
Holcim jobs lost in New Zealand/Australia merger
24 June 2014New Zealand: Holcim New Zealand has revealed that a company shake-up will result in four management jobs in Christchurch being axed in the next few months. In addition, the wind-down of the Westport cement plant in 2016 has been confirmed, which will result in the loss of about 120 jobs. It is also considering selling part or all of its lime business.
Holcim New Zealand's managing director, Jeremy Smith, will be made redundant, with Holcim announcing that it will combine its New Zealand and Australian operations. Three other management jobs will also be axed, although the head office in Christchurch will remain open.
"Other than the four senior roles announced as being dis-established in 2015, no other changes are planned in the near future," said Smith. Commenting on the status of other staff numbers once all the plans come into play, Smith said, "That is not known and it is too early to even discuss. The changes to the business model will eventually reduce the scale and scope of the New Zealand business over the coming years and it will require a smaller corporate management operation after 2016." Holcim currently employs 420 staff in New Zealand.
Holcim announced in 2013 that it was halting cement manufacturing in New Zealand and replacing it with bulk importing of cement for the New Zealand market. As such, Holcim has gained final approvals for construction to begin on its two new import cement terminals at Timaru and Auckland. Planning work is already underway on the Timaru project, where two 30,000t cement terminals are to be built. The terminals are part of Holcim's US100m investment in its New Zealand operations.
The creation of Lafarge Africa, the clearance of the Cemex West acquisition by Holcim in Germany and the sale of Lafarge's assets in Ecuador all hint at the scale of business that LafargeHolcim will command when it comes into existence. Despite the media saturation of coverage on the merger the implications in developing markets are still worthwhile exploring, especially in Latin American and Africa.
In sub-Saharan Africa, Lafarge is merging its cement companies in Nigeria and South Africa to create Lafarge Africa. Analysts Exotix have described the move as, 'the birth of a leading player on a continental scale'. Indeed, if Lafarge wanted to grow Lafarge Africa to encompass its many other African cement producing subsidiaries it could hold at least 17 integrated cement plants (including plants in north Africa) with a cement production capacity of at least 40Mt/yr in 10 countries and infrastructure in others. That puts it head-to-head with Dangote's plans to meet 40Mt/yr by the end of 2014 through its many expansion projects. Following these two market leaders would come South African-based cement producer PPC with its expansion plans around the continent.
Meanwhile across the Atlantic in Latin America the Lafarge-Holcim merger threatens Cemex. Unlike in Africa where Lafarge has a ubiquitous but disparate presence, Lafarge and Holcim's cement assets are more evenly scattered around the Caribbean, Central and South America. In terms of cement production capacity Cemex and Lafarge-Holcim will both have around 30Mt/yr, with Cemex just in front. The next biggest cement producers in Latin America will be Votorantim (present mainly in Brazil) with just over 20Mt/yr and Cementos Argos (Columbia) with about the same. This includes some new acquisitions in the United States for the growing Columbian producer. In Ecuador Lafarge and Holcim held over 50% of the market share, hence the sale by Lafarge of its assets to Union Andina de Cementos for US$553m.
Depending on how well the merger integrates the two companies, corals the various subsidiaries and implements strategic thinking the merger could just create business as usual with little disruption to the existing order. Yet in both continents the merger has the opportunity to shake up and reinvigorate the cement markets as existing players suddenly discover serious new competition and react accordingly.
Africa has a population of 1.1bn and it had a Gross Domestic Product (GDP) of US$2320/capita in 2013. South America had a population of 359m in 2010 and a GDP of US$8929/capita. This compares to US$27,250/capita in Europe and US$54,152/capita in the US. The economic development potential for each continent is humongous. Post-merger, LafargeHolcim will be first or second in line for some of this potential in Latin America and Africa.
Nigeria/South Africa: French cement maker Lafarge intends to combine its businesses in Nigeria and South Africa. The new company Lafarge Africa, which will be 73% owned by Lafarge Group, will remain listed on the Nigerian Stock Exchange. The new company will have a cement production capacity of about 12Mt/yr in South Africa and Nigeria as well as operations in aggregates, ready-mix and fly ash. The new company will be worth more than US$3bn.
"I am proud to be part of the creation of this leading African building materials platform. It will provide access to growth in two of the largest economies on the continent. It will mean that our shareholders are invested in a larger and more geographically diverse business and it will contribute significantly to the economic growth of both our nations, " said Chairman of Lafarge WAPCO, Chief Olusegun Osunkeye.
Under the proposed terms, Lafarge Group will transfer its direct and indirect shareholdings in Lafarge South Africa Holdings (Pty) Limited (100% - representing 72.4% of underlying companies in South Africa), United Cement Company of Nigeria Limited (35%), Ashakacem plc (58.61%) and Atlas Cement Company Limited (100%) to Lafarge WAPCO. The transaction is subject to Lafarge WAPCO shareholder approvals and obtaining required regulatory and other customary authorisations. The group anticipates completion during the second half of 2014.
India: India Cements plans to merge with its subsidiary, Trinetra Cements. N Srinivasan, vice-chairman and managing director of India Cements, said that the company wanted to consolidate cement operations. The merger will also include Trishul Concrete Products and involve selling land near its plants in Tamil Nadu and Andhra Pradesh.
"We will get the benefit of profitability of Trinetra and improve the performance of India Cements," said Srinivasan. He adding that, following the merger, the total cement production capacity of India Cements would rise to 15.8Mt/yr.
For its first quarterly results in 2014 India Cements reported a net loss of US$5.19m. The company has also been under a corporate debt-restructuring scheme since January 2003, which ended in March 2014 with a US$9.69m charge. India Cements has a production capacity of 15.5Mt/yr. It has seven integrated cement plants in Tamil Nadu and Andhra Pradesh, one in Rajasthan (through Trinetra Cements) and two grinding units, one each in Tamil Nadu and Maharashtra.
Holcim Indonesia delays subsidiary merger deal
08 May 2014Indonesia: Holcim Indonesia has delayed the planned merger between two of its units as it is yet to get the go ahead from the stakeholders and the Financial Services Authority. The stakeholders were expected to approve the merger during their annual meeting on 6 May 2014. However, the decision has been postponed until 2 June 2014.
In April 2014 Holcim announced the plan to merge two of its fully-owned cement manufacturing subsidiaries, Bintang Polindo Perkasa and Wahana Transtama, in a bid to improve efficiency. Bintang Polindo Perkasa operates a cement plant with a production capacity of 0.60Mt/yr in Ciwandan, Banten Province, while Wahana Transtama has been inactive since 2006.
LafargeHolcim: everyone expects the Spanish acquisition
16 April 2014A lot has happened since the 4 April 2014 announcement that Lafarge and Holcim intend to become LafargeHolcim. There have been several related announcements from around the global cement industry this week, prompting some interesting discussion with respect to the future look of the industry.
Oyak Group, which operates a number of plants in Turkey, appears to be limbering up for LafargeHolcim-based acquisitions in the UK, the EU or Africa, with aims to become a regional player. Meanwhile, Lafarge has pulled out of talks regarding its proposed acquisition of the Cementos Portland Valderrivas (CPV) plant in Vallcarca, Spain, directly citing the merger as the reason for this. We have also seen Colombia's Cementos Argos purchase a grinding plant in French Guiana, which was jointly-owned by Lafarge and Holcim. Announced just a few days after the merger, this asset was presumably jettisoned in order to avoid future issues with local anti-monopoly authorities. Finally, ACC and Ambuja have announced that they would retain their separate identities in India after the merger.
This flurry of announcements is likely to be just the start of frenzied speculation as the competitors of Lafarge and Holcim work out what assets are most likely to be sold. So what about the multinationals, Cemex and HeidelbergCement?
Cemex certainly has cause for concern, weighed down by the debt that it took on in 2007 with the acquisition of Australia's Rinker. It is in a relatively weak position with respect to acquiring any LafargeHolcim divestments. Could it lose market share? HeidelbergCement, by contrast, has long extoled the virtues of its financial efficiency policies and its diverse and forward-looking geographical spread. It could snap up more strategic assets after the merger. While both of these multinationals will be wary of dealing with an enlarged competitor in LafargeHolcim, they have the opportunity to increase their market shares and both will move up one position in the global cement producer rankings.
It is likely to be the smaller players that have the most to gain from the shedding of LafargeHolcim's various assets, especially those that enjoy strong domestic markets and have cash at the ready. Oyak Group has already entered the ring but what if Nigeria's Dangote, Brazil's Votorantim, Colombia's Cementos Argos or Thailand's SCG go on a spending spree? Could one of these rise to become a new global cement multinational?
However, if we can expect a change anywhere it will be in Spain. Following reports in 2012 that Spanish cement production had crashed to its lowest levels since the 1960s jobs have been shed and profits have evaporated. In 2013 Holcim and Cemex agreed to combine all of their operations in Spain. Roughly, according to the Global Cement Directory 2014, cement production capacity in Spain breaks down as follows: CPV (23%), Cemex (18%), Lafarge (11%) and Holcim (10%). Letting the Cemex-Holcim deal happen, followed by the Lafarge-Holcim merger and the CPV Vallcarca purchase, would have led to a major headache for Spain's competition authorities, creating an entity with 43% production market share! Unsurprisingly the first casualty has been the CPV Vallcarca deal. Whatever happens, the next 18 months will be an interesting period for the global cement industry.
Holcim and Lafarge agree merger to create cement giant
07 April 2014Worldwide: Reuters has reported new details regarding the potential merger of Holcim and Lafarge. The merger would spark some Euro5bn of asset sales worldwide to steer it through antitrust rules.
With operations in 90 countries, Lafarge and Holcim expect to face antitrust scrutiny in 15 jurisdictions, including Brazil, Canada, Ecuador, France, the UK, the US, Morocco and the Philippines. LafargeHolcim could have a market share in excess of 50% in some areas. Even in countries such as the US where it would be smaller, monopoly authorities are likely to become involved.
The deal will help the companies slash costs, trim debt and better cope with soaring energy prices, tough competition and weaker demand that have hurt the sector since the 2008 economic crisis. The groups complement each other well geographically, with Lafarge stronger in Africa and Holcim stronger in Latin America. Emerging markets such as Latin America and Africa will account for 60% of the new group's sales, but no single country will represent more than 10%.
"The new group will offer higher growth and low risk thus creating more value," said Lafarge chief executive Bruno Lafont, who will become CEO of LafargeHolcim. The companies added that they expected total annual savings from joining forces of Euro1.4bn after three years, thanks to economies of scale, better operational efficiency and lower financing costs.
Lafarge and Holcim confirmed that they would sell businesses worth 10 - 15% of the group's earnings before interest, tax, depreciation and amortisation (EBITDA) to satisfy antitrust concerns, worth about Euro5bn in total. Two-thirds of the asset sales would be in Europe, according to Lafont. The companies also have overlapping business operations in Canada, Brazil, India and China.
"We are immediately going to start discussions with the European Commission and other competition regulators in a constructive spirit," Lafont said, adding that the combined company would continue to improve operational performance and that there would be no plant closures associated with the deal.
The expected EBITDA synergies are made up of Euro200m at operational level, Euro340m in purchasing, Euro250m in sales and Euro200m in innovation. On top of this, the company sees Euro200m of savings on financial costs and Euro200m for investments.
Lafarge's largest shareholder, Belgian holding company Groupe Bruxelles Lambert, which has a 21% stake, said that it would support the deal and would hold about 10% stake in the combined group after the transaction was completed. The transaction has the support of core shareholders and is expected to close in the first half of 2015, the companies added.
European Commission spokesman for competition policy, Antoine Colombani, said that the companies had not yet formally notified the European Union about the deal.