By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-One of the world’s leading suppliers of cement and aggregates, Holcim Ltd said on Monday a planned €42 billion ($44.27 billion) merger with Lafarge SA may no longer hold.
This is coming on the heels of pressure from shareholders of Holcim which made the company say it wouldn’t go ahead with its proposed deal with Lafarge SA 4.04 percent on the current terms.
The Switzerland’s based Holcim said in a statement it would seek changes in “the financial terms and governance structure” of the agreement with Lafarge. It said specifically it would seek changes to the deal’s proposed one-for-one share exchange ratio.
Holcim is seeking better financial terms and questioning whether Lafarge’s chief executive should lead the combined company as initially agreed.
According to reports, under French and Swiss law, any transaction will have to be approved by two-thirds of Holcim’s shareholders in an extraordinary general meeting, and two-thirds of Lafarge’s shareholders will need to accept Holcim’s exchange offer.
“The Board of Directors of Holcim Ltd has decided that the agenda for the Annual General Meeting of April 13, 2015, will only contain topics related to Holcim Ltd. This decision has been taken due to pending antitrust clearance in the US and India, pending EU approval of CRH as purchaser of divested assets, as well as delays in the social process in France.
Furthermore, the Holcim Board of Directors has concluded that the combination agreement can no longer be pursued in its present form, and has proposed to enter into negotiations in good faith around the exchange ratio and governance issues. Lafarge has indicated that it refuses to renegotiate, except the exchange ratio,” the statement added.
Reports have it that Shareholders of Holcim are demanding more favourable terms due to the way the two (2) companies have performed since the deal was announced.
It said that Holcim, which was valued at 47 percent of the proposed merged entity, churned out over three (3) times as much free cash as the supposedly more valuable Lafarge last year.
