CRH in €6.5 billion Lafarge/Holcim deal

Lafarge and Holcim have to undertake the major divestment programme as part of gaining regulatory approval for their proposed merger.

Albert Manifold, CRH chief executive, said, “This transaction represents a significant value creation opportunity for CRH. We are acquiring a quality portfolio of assets, which complement our existing positions, at an attractive valuation and at the right point of the cycle.”

He said the acquisition strengthened the group’s presence in important markets across North America, and Western, Central and Eastern Europe, as well as providing new platforms for growth in emerging markets.

The deal comprises assets in the building materials industry which are currently owned by either Lafarge or Holcim.

This includes all of Holcim’s assets in Canada, plus six US cement terminals and the Trident cement plant in Montana, US.

In Western Europe, all of Lafarge’s assets in the UK are involved – post the acquisition by Lafarge of the remaining 50% of the Lafarge UK joint venture, Lafarge Tarmac – except for the Cauldon cement plant in Staffordshire and related assets.

All of Lafarge’s assets in Germany are included, plus all of Holcim’s assets in France, except for the Altkirch plant and associated assets in the Haut-Rhin region. Lafarge’s Saint Nazaire grinding station is included, as are all of Lafarge’s assets in France’s Indian Ocean island of La Reunion, with the exception of its minority shareholding in Ciments de Bourbon.

In Central and Eastern Europe, the deal includes all of Holcim’s assets in Slovakia and Serbia, and all operating assets in Hungary. All of Lafarge’s assets in Romania are included.

In emerging markets, the assets of Lafarge Republic in the Philippines are a part of the deal, except certain assets including the Iligan and Mindanao cement plants. Certain cement assets from Lafarge and Holcim’s Brazilian footprint are included.

CRH said the deal would be funded by €2 billion in cash from its balance sheet, new debt and the proceeds of an equity placing of 9.99% of CRH’s current issued share capital. Completion of the deal is expected in the first half of this year.

Manifold said, “The assets will integrate well into existing CRH networks, benefiting from our strong business-building capabilities while providing an important platform for future development opportunities.

“We have maintained our disciplined investment approach through our continued focus on capital efficiency and remain focused on bringing returns back to peak during this cycle.”

Lafarge and Holcim said that taken together, the assets being disposed of under the terms of the CRH deal generated estimated 2014 sales of €5.2 billion, with an estimated 2014 operating EBITDA (earnings before interest, taxes, depreciation and amortization) of €744 million.

Synergies

CRH said it had identified €90 million of synergies, net of implementation costs, which would be achieved in the first three years after the acquisition.

Wolfgang Reitzle, designated chairman of the board of directors of LafargeHolcim and Bruno Lafont, designated CEO of the future combined company, said, “The projected transaction is a key step towards the creation of LafargeHolcim and the value offered reflects the strong quality of the selected assets. This successful outcome demonstrates the quality of the collaborative work undertaken by Holcim and Lafarge teams.

“With this announcement, we remain firmly on track to complete our proposed merger in the first half of 2015.”