The Ripple Effect of the Lafarge and Holcim Megadeal

| Published on August 1, 2014

by Therese Dunphy, Editor-in-Chief

tdunphy@randallreilly.com

As the megadeal between Lafarge and Holcim proceeds, it will be interesting to watch the ripple effect across the aggregates industry, both in the United States and around the world.

Three months after the merger was announced, the companies released a list of the assets it plans to dispose of in order to avoid market monopolies. Their statement came on the heels of Anglo American’s disclosure that it sold its 50-percent stake in joint assets with Lafarge to that company for approximately $1.5 billion.

Highlights of Holcim and Lafarge’s proposed divestiture include the following:

• Austria: Lafarge’s Mannersdorf cement plant;

• Brazil: The companies say they will soon file a comprehensive package of divestitures with the Brazilian regulator, CADE, but haven’t released package details;

• Canada: Holcim’s assets;

• France: Holicm’s assets in metropolitan France (except its Altkirch cement plant and aggregates and ready-mix sites in the Haut-Rhin market) and Lafarge’s assets on Reunion island, except its shareholdings in Ciments de Bourbon;

• Germany: Lafarge’s assets;

• Hungary: Holcim’s assets;

• Mauritius: Holcim’s assets;

• The Philippines: The associated companies of Lafarge and Holcim are exploring the combination of their businesses, other than LRI’s Bulacan, Norzagaray, and Iligan plants, which will be divested as part of the rollup;

• Serbia: Holcim’s assets; and

• The U.K.: Lafarge Tarmac assets, with the possible exception of one cement plant.

Immediately, I thought of the Lafarge Tarmac operation in Buxton, Derbyshire, England, that is home to the Hillhead quarry show (see RollOuts, beginning on page 6, to see some of the new equipment that debuted at the event). The quarry will likely have new owners by the time the 2016 show is held. Closer to home, Holcim’s Canadian assets include Dufferin Aggregates, a well-respected group with nearly a dozen aggregates plants in the greater Toronto and Montreal areas.

What will be the impact of the series of buying and selling about to ensue? Anglo American has already announced it will pay down debt with the proceeds of its sale to Lafarge. Lafarge and Holcim clearly hope to shape their own divestitures rather than leave it to regulators in the various global markets.

What about the buyers? We’ve seen a lot of big deals in recent months. Will another global company emerge from this divestiture? Could Dufferin Aggregates be acquired by a U.S. company and once again change the landscape of the North American market?

Time will tell, and Aggregates Manager will be watching.

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