€41-bn Holcim-Lafarge merger gets conditional US, Canadian nod
05 May 2015
US and Canadian regulators yesterday approved the mega, €41-billion merger of cement giants Holcim Ltd of Switzerland's with France's Lafarge S.A. on conditions that they would divest certain assets in both countries.
The US Federal Trade Commission (FTC) and the Canadian Competition Bureau approved the merger on condition that Holcim and Lafarge sell one cement plant, one quarry and five cement terminals and other distribution assets in the US, and two cement plants, as well as some cement terminals, ready-mix concrete plants and other aggregates and construction facilities in Canada.
The FTC said that the merger could harm competition in 12 markets for portland cement, an essential ingredient in making concrete, and in two additional markets for slag cement, a specialty cement used for making more durable concrete structures.
The Canadian Bureau said that its review was focused on determining whether assets located outside of the country were important to the effectiveness of Holcim's Canadian business.
In April last year, two of the world's biggest cement companies, Holcim and Paris-based Lafarge agreed to merge, creating the world's biggest cement maker, with a market cap of $50 billion and annual sales of nearly $43 billion. (See: Cement giants Holcim and Lafarge announce merger of equals)
The merger would see annual sales of Lafarge-Holcim more than double than that of its next-biggest competitor, HeidelbergCement AG of Germany, and far above Beijing-based China National Building Materials Group Corp, and Cemex SAB.
Lafarge has a strong hold in Africa and the Middle East, while Holcim has a meager presence in these regions, but Holcim is strong in Latin America, where Lafarge has no presence.
As soon as the deal was announced analysts said that Holcim and Lafarge, the two biggest listed companies in the cement sector already, with operations in 90 countries, would face antitrust scrutiny in 15 countries and would have to sell some €5 billion of assets to secure regulatory approvals.
Despite their announcement of sale of certain assets, which could be mainly in Western Europe, and also Canada, the US, Brazil, India, Serbia, Romania, Hungary, Morocco, Philippines and China, the merger is expected to attract antitrust issues from global regulators, especially in the EU where both companies, along with others, are currently under a probe for price fixing.
The previous European Competition Commissioner Joaquin Almunia had said that the size of the merger would require a lengthy examination before it could be approved.
Late last month the European Commission approved the deal subject to the giants selling some assets in the European Union to Ireland-based rival CRH Plc.
The Indian competition regulator had earlier said that the merger was likely to hurt competition in the country and directed both companies to publish details of the merger to the knowledge of the public and rival companies that could be affected or likely to be affected by such combination.
Kumar Manglam Birla chairman of India's largest cement maker Aditya Birla Group yesterday said the merger will not be a threat for its unit UltraTech Cement.
Founded in 1833, Paris-based Lafarge has 161 cement plants in 58 countries and more than 1395 aggregates and concrete production facilities in 36 countries.
Holcim has production sites in around 70 countries and a market presence on every continent. The 102 year-old company recorded net sales of over 19.7 billion Swiss francs in 2013.
