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Individual Assignment on
Holcim Merger with Lafarge
Submitted To
Prof. Shiv Nath Sinha
Submitted By
Vaibhav Gupta (2014313)
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"Now as LafargeHolcim, we will step into the next phase of our transformation to become the
leader in every respect a company that has a positive impact on the world and can make a real
difference for its customers, its employees, its shareholders and society."
Eric Olsen, CEO, LafargeHolcim
1. Introduction
On April 7, 2014, Holcim and Lafarge, the two leader firms declared the intention to combine
the two companies by which has been termed as a merger of equals to be effected by way of a
public exchange offer with an exchange ratio which was initially announced as one registered
share of Holcim for one Lafarge share. The merged entity would be working towards the target
of creating it as a highest performing company in the building materials industry. It would make
them the world's biggest cement maker with combined sales of around 40 billion euros. The
Merger was unanimously approved by their respective Board of Directors and supported by the
anchor shareholders of both companies, Schweizerische Cement-Industrie-Aktiengesellschaft,
Groupe Bruxelles Lambert and NNS Holding S..r.l, in the undertaking agreements dated April
6, 2014. Later on the Boards of Directors of Holcim and Lafarge on March 20, 2015 reached an
agreement to amend certain terms of the Merger, including the exchange ratio which has been
modified to nine registered shares of Holcim for every ten Lafarge Shares. The anchor
shareholders of both companies confirmed their undertakings in confirmation undertaking
agreements dated March 19, 2015. The Combination Agreement entered into between Holcim
Ltd and Lafarge S.A. on July 7, 2014 and amended on March 20, 2015 (the Combination
Agreement) provides that Holcim Ltd shall initiate a public exchange offer with an exchange
ratio of nine registered shares of Holcim for every ten Lafarge Shares (the Exchange Offer). It
was also agreed that the combined group would be based in Switzerland and listed in Zurich and
Paris. By this merger companies are expecting a total annual savings of 1.4 billion euros. The
deal draw scrutiny from competition watchdogs from many countries wherever it is situated,
have obtained clearance of the combination by the competition authorities in the following
jurisdictions : Brazil, Canada, China, Common Market for Eastern and Southern Africa
(COMESA), European Union, India, Kenya, Mexico, Morocco, Russia, Serbia, Singapore, South
Africa, Tanzania, Turkey, Ukraine and the United-States. On 15 July 2015 LafargeHolcim
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officially launched the new group around the world and the listing of the new LafargeHolcim
shares in Zurich and Paris.
Unique value proposition for shareholders
Significant synergies
3. About Lafarge
Lafarge is a French based industrial company specializing in three major products: cement,
construction aggregates, and concrete. The company has become a world leader in building
materials. The company has presence in over 61 countries and employs employs 63,000 people.
It recorded a total sales of 12.8 billion in 2014. As a top-ranking player in its Cement,
Aggregates and Concrete businesses, it adds to the construction of cities around the world,
through its innovative solutions by providing them with more housing and making them more
compact, more durable, more beautiful, and better connected. Lafarge contributes to building
Mergers & Acquisitions
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better cities around the world, through its innovative solutions providing them with more housing
and making them more compact, more durable, more beautiful, and better connected. They have
developed solutions through which cities can provide more housing to cater the issue of housing
for all, including affordable housing, be more compact, with the construction of vertical
buildings which help reduce urban sprawl, be more durable, with long-lasting constructions and
by taking full account of environmental concerns, including energy efficiency of buildings and
water preservation, be more beautiful, enabling architectural creativity and performance and
better connected, with solutions for infrastructure such as roads, airports, stations, bridges,
tunnels, etc.
4. Industry Outlook
Holcim and Lafarge are two major leader in production of cement, aggregates (crushed stone,
sand and gravel), ready-mix concrete and asphalt, and provide related services. Their building
products and solutions are used to construct and renovate homes, buildings and infrastructure.
The vision of LafargeHolcim was to create the most advanced group in the building materials
industry. The combination will create the best growth platform in the industry and enable
LafargeHolcim to drive growth across its global, well-balanced footprint; deliver best-in-class
operating performance and returns enhanced by synergies; and fundamentally transform the
business. Furthermore, the combination will position LafargeHolcim to meet the changing
market needs by enhancing the value proposition to meet customer demands, addressing
challenges of urbanization, and setting the benchmark on corporate social responsibility,
including sustainability and climate change mitigation.
There has been mixed response about the kind of competition it will create in the industry.
Competition Commission of India (CCI), the cement majors said that after the proposed
transaction, the effective competition in the cement as well as the ready mix concrete segment
will continue to sustain and combined entity will continue to face aggressive competition from
existing players. Oxford Business Group said that the merger of Lafarge and Holcim could
shake-up the local industry of Philippines.
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OSI
April 1, 2015
April 9, 2015
April 14, 2015
May 7, 2015
May 11, 2015
June 1, 2015
July 3, 2015
July 9, 2015
July 10, 2015
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Number
of
554,093,981
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Apart from this following direct reports of the future CEO have been selected under project
mode:
Strategy and M&A, Christof Haessig, currently in charge of Corporate Finance and
Treasury at Holcim
Communication, Public Affairs and Sustainable Development, Alexandra Rocca,
currently in charge of Communication, Public Affairs and Sustainable Development at
Lafarge
Legal, Xavier Dedullen, currently in charge of Legal & Compliance at Holcim
Health and Safety, Sapna Sood, currently in charge of Health and Safety at Lafarge.
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shares of the target company through the public offer process taking its shareholding in Lafarge
Pakistan to 87.93%.
Seruji buys 60% stake in Savannah Cement (31 March 2015)
Mauritian company Seruji has acquired a 60% stake in Athi River-based Savannah Cement
following
approval
from
the
Competition
Authority
of
Kenya
(CA).
Seruji completed the buyout from China's Wan Ho International, which held 40% and Acme
Wanji, which owned 20%. Savannah Heights has retained a minority stake in Savannah Cement.
The shareholding shake-up makes Savannah Cement Kenya's first fully-owned cement producer,
as both Seruji and Savannah are owned by Savannah Cement founder Benson Ndeta.
UNACEM completes Ecuador acquisition (04 December 2014)
Peruvian cement producer Union Andina de Cementos (UNACEM) has completed the purchase
of Lafarge's cement operations in Ecuador. "We are pleased with the closing of the transaction,
which represents an important step in our growth strategy," said Carlos Ugs, managing director
of UNACEM. The company closed the acquisition, which was initially announced in May 2014,
for approximately US$517m. The deal involves the purchase of a 1.4Mt/yr cement plant located
in Otavalo, in the north of Ecuador.
Taiwan Cement buys Sichuan Railway Group Cement for US$111m (05 November
2014)
Taiwan Cement, is purchasing Sichuan Railway Group Cement for US$111m to expand its
presence in China. Taiwan Cement made the purchase through its subsidiary TCC International
Holdings. The Sichuan Companys production site has a cement production capacity of 2Mt/yr.
UltraTech completes acquisition of cement units of Jaypee Cement (03 September 2014)
UltraTech Cement has completed the acquisition of cement plants of Jaypee Cement Corporation
(JCCL) in Gujarat State. UltraTech informed the Bombay Stock Exchange that the acquisition
process had been completed and became effective from 12 June 2014.
In September 2013 UltraTech acquired the cement unit of JCCL, which comprised an integrated
cement plant at Sewagram and a grinding plant at Wanakbori, for US$627m. Post-acquisition,
UltraTech's total capacity in India stands at 58.8Mt/yr. including overseas capacity it is 62Mt/yr.
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Exhibits
Exhibit1: Consolidated statement of income of Group Holcim
Million CHF
Net sales
Production cost of goods sold
Gross profit
Distribution and selling expenses
Administration expenses
Operating profit
Other income
Share of profit of associates and joint ventures
Financial income
Financial expenses
Net income before taxes
Income taxes
Net income
Attributable to:
Shareholders of Holcim Ltd
Non-controlling interest
Earnings per share in CHF
Earnings per share
Fully diluted earnings per share
2014
2013
19,110
(10,548)
8,562
(4,924)
(1,321)
2,317
179
140
183
(611)
2,207
(588)
1,619
19,719
(11,087)
8,632
(5,021)
(1,254)
2,357
204
161
183
(777)
2,128
(533)
1,596
1,287
332
1272
324
3.95
3.95
3.91
3.91
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Million CHF
12/31/2014
12/31/2013
2,149
2,695
1,863
317
283
7,307
2,244
2,521
1,704
365
756
7,590
491
1,758
21,410
7,779
527
412
32,378
536
1,562
20,029
7,486
391
351
30,355
Total assets
39,684
37,944
2,101
2,502
419
1,634
234
33
6,923
1,934
2,920
462
1,708
224
213
7,461
9,291
863
1,415
1,080
12,649
8,785
655
1,290
1,077
11,807
Total liabilities
19,572
19,267
Share capital
Capital surplus
Treasury shares
Reserves
Total equity attributable to shareholders of Holcim Ltd
Non-controlling interest
Total shareholders' equity
654
7,776
(82)
9,082
17,430
2,682
20,112
654
8,200
(102)
7,453
16,205
2,471
18,677
39,684
37,944
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2013
2,128
(204)
(161)
594
2,357
1,538
178
(217)
3,857
137
145
(652)
(659)
(42)
2,787
(1,968)
209
(2)
36
(300)
300
(1,724)
(2,205)
205
(8)
407
(263)
199
(1,665)
(424)
(297)
6
11
3,833
(3,506)
2,849
(3,453)
(3)
10
(975)
(374)
(202)
6
0
6,252
(6,465)
2,635
(3,471)
(5)
0
(1,625)
(201)
(503)
1,993
(201)
150
1,942
2,711
-503
(215)
1,993
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References
http://www.globalcement.com/news/itemlist/tag/LafargeHolcim
http://www.cemnet.com/News/story/157204/lh-merger-final-results-of-public-exchange-offer.html
http://www.finanzen.net/nachricht/Holcim-Press-Release-on-the-Filing-of-a-Draft-Public-ExchangeOffer-and-the-Related-Draft-Offer-Document-for-the-Shares-of-Lafarge-4334471
http://www.lafarge.com/en/financial-reports
http://www.bloomberg.com/news/articles/2014-04-07/holcim-to-merge-with-lafarge-to-form-biggestcement-maker
http://www.thestar.com.my/Business/Business-News/2015/04/11/Uncertain-outlook-for-cementindustry/?style=biz
http://business.financialpost.com/investing/how-holcim-lafarges-cement-mega-deal-could-shake-upcanadas-construction-industry?__lsa=ee1a-795b
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