Lafarge SA and Holcim Ltd said on Friday that they had repaired cracks that had threatened to cause the collapse of their merger to create the world’s biggest cement company.
“The Boards of Directors of Holcim and Lafarge are pleased to announce that they have reached an agreement on revised terms for the merger of equals between both companies,” they said in a joint statement.
Last year the two companies announced plans to create a cement titan employing more than 130,000 people, which would generate annual sales of 32 billion euros (US$34.63 billion) and underlying profits of 6.5 billion euros — a major event in the global construction industry.
However, with the sharp rise in the Swiss franc having driven up Holcim’s value since the merger was agreed last year, the Swiss company on Sunday last week said that the terms of one Holcim share for one Lafarge share were no longer appropriate.
On Friday, the companies agreed on a new exchange ratio of nine Holcim shares for 10 Lafarge shares, although that is not as favorable as the Swiss company had sought.
Holcim’s bid to sideline Lafarge chief executive officer Bruno Lafont — one of the architects of the merger — only partially succeeded.
Holcim’s executives apparently did not appreciate Lafont’s hands-on centralized management style, and he agreed to give up the chief executive officer post to ensure the merger went forward.
Instead, Lafont and Holcim board chairman Wolfgang Reitzle are both to become non-executive co-chairmen of the merged company’s board.
Lafarge would soon propose a candidate for chief executive officer, to be accepted by Holcim’s board, the companies said in the statement.
The merger must be approved by two-thirds of shareholders in each of the companies at special general assemblies.
The French government said it was paying attention to developments to ensure that the “French anchor” in the industry is maintained. The future headquarters of the merged company is to be based in Switzerland but a research and development center will remain in the Lyon region.
Investors applauded the revised merger agreement, sending Lafarge shares soaring 2.12 percent to close at 63.62 euros on Friday, while Holcim’s shares saw a more moderate rise of 0.46 percent to 76.15 Swiss francs.
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