Holcim headquarters in Zurich. Holcim and Lafarge are progressing in last-ditch talks to salvage their merger to form the world’s biggest cement company as one of the largest shareholders signalled support for a compromise on leadership.

Bloomberg/London


Holcim and Lafarge are progressing in last-ditch talks to salvage their merger to form the world’s biggest cement company as one of the largest shareholders signalled support for a compromise on leadership.
The companies have reached an understanding to make Lafarge head Lafont co-chairman of the new entity alongside Holcim Chairman Wolfgang Reitzle following resistance to Lafont becoming CEO of the merged company, people familiar have previously said.
“Bruno Lafont and Wolfgang Reitzle will ensure the future integration and success of that venture,” Egyptian billionaire Nassef Sawiris, who is Lafarge’s second-biggest shareholder, said in a telephone interview. He declined to specify their roles, but said Lafont was “key to the success of major milestones” including synergies achieved before and after the merger was announced last year.
Holcim has been questioning Lafont’s ability to reach savings targets after it outperformed its French partner on everything from sales to profit. Lafont and Holcim managers have also clashed over issues including leadership style and strategy, according to the people. Another Lafarge executive is likely to be chosen as the new CEO of the combined entity instead, they said.
A preliminary agreement on adjusted financial terms and leadership changes could be reached as early as today, according to the people, who cautioned that talks may drag on longer or yet fall apart.
The two companies are discussing a revised exchange ratio where Holcim would give about 0.90 of a share in return for one Lafarge share, instead of the original one-to-one ratio, said the people, who asked not to be identified because talks are private.“I sincerely hope the agreement being worked on will reflect the restoration of the principles of a merger of equals,” said Sawiris, who owns the Lafarge stake via his NNS Holding. The perception of the transaction moved from being a merger of equals to Swiss voices claiming a reverse takeover by Lafarge of Holcim, he said.
Shareholders of Ireland’s CRH Plc, which agreed to buy €6.5bn ($6.9bn) in assets that Holcim and Lafarge need to sell for regulatory approval, approved the purchase.
The building-materials supplier, that’s tied its global ambition to the completion of the deal, has a ‘Plan B’ if the Holcim-Lafarge merger falls through and could buy other assets, CEO Albert Manifold told reporters in Dublin.CRH is in “close dialogue” with Holcim and Lafarge and spoke to their representatives earlier today, the CEO said, adding that he’s confident the merger will happen.Lafarge rose as much as 1.3% in Paris, giving it a value of 18bn euros, while Holcim gained as much as 1.7% in Zurich, lifting the market value to 25bn Swiss francs ($25bn). CRH added as much as 1.6% in Dublin.
The dispute over leadership by the 58-year-old Frenchman Lafont shows how a clash of personalities can become the biggest liability in mergers. The gum-chewing, cigar smoking Lafont and the soft-spoken Holcim CEO Bernard Fontana, who was due to remain in his post until the merger completion, have disagreed on key issues from the start, a person familiar with the matter said earlier this week.
Holcim and Lafarge have predicted the merger will lead to cost savings of 1.4bn euros annually, giving them an advantage over rivals as a global recession eroded demand for building materials and forced some kilns to run at a loss.