Holcim shareholders reject revised terms of merger with Lafarge

Shareholders of Swiss cement giant Holcim have rejected the revised terms of the group's planned merger with Lafarge as they were unhappy with the deal designed to placate the French cement group.

The planned merger of the two European cement giants, may be on the verge of collapse unless Lafarge agrees to a revision to the agreed terms of merger, including swap ratio and post-merger management (See: Holcim seeks renegotiation of merger deal with Lafarge ).

Russian businessman Filaret Galchev, who owns a 10.8-per cent stake in Holcim via Eurocement Holding, has rejected the new merger terms, which give Holcim shareholders a more favourable share exchange and which remove Lafarge boss Bruno Lafont from the role of CEO of the combined group.

Galchev, Holcim's second-largest shareholder, views the terms as "not satisfactory and half-baked", the Sonntagszeitung reported, citing an unnamed source described as a Galchev confidant.

Under the revised merger terms, both parties had agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares.

Galchev said the exchange ratio offered by Lafarge, at 1:0.9 shares, does not compensate Holcim shareholders adequately, and that a decision needs to be made about who will lead any combined firm.

The boards had also proposed that a new chief executive officer for the combined group, proposed by the Lafarge board and accepted by the Holcim board, will be appointed from the closing of the transaction.

Separately, Harris Associates said it was not prepared to back the deal until it knew who would take Lafont's place.

"Before we decide on the transaction we first want to know who will be put forward for this post," David Herro, chief investment officer for international equities at Harris, said in an interview with Swiss business newspaper Finanz und Wirtschaft.

Harris owns 3.19 per cent of Holcim's shares according to Reuters.

The merger of Holcim and Lafarge would create the world's largest cement firm, with annual sales of over €30 billion. However, for that alternatives have to be worked out now.