Lafarge Plans $30 Billion American Listing

 

In a significant development, Holcim, the parent company of Lafarge Africa, has unveiled plans to spin off its North American business, a move aimed at unlocking value and accelerating growth for the unit. This strategic decision follows Lafarge Africa’s successful spin-offs of its South African and Ghana units, a move that has enhanced profitability and boosted the performance of the company’s stock on the Nigerian Stock Exchange.

Miljan Gutovic, the current head of Holcim’s European business, is set to take over as the group’s chief executive from May 2024. Outgoing chief Jan Jenisch will continue as chair and lead the planned break-up of the North American business.

Motivation for Spin-Off:

Jenisch emphasized that the success of the North American business had outgrown its subsidiary status, necessitating a more focused management approach. With all the necessary tools and a streamlined supply chain, Holcim is positioning itself for more agile and effective operations.

 

 

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Jenisch told the Financial Times, “We are too successful in North America, we are too big to manage this as a subsidiary. We have all the tools, we have all the supply chain in place. But we needed more focused management.”

Market Dynamics and Valuation:

Despite comprising only about 40% of sales, the North American business is expected to be valued at around $30 billion, a move that could significantly impact Holcim’s overall market capitalization. This plan aligns with the trend of European companies seeking US listings for higher valuations and increased market visibility. Holcim will continue to be listed on the Swiss stock exchange.

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Holcim calculates that the Biden administration’s infrastructure investment policies will enable it to increase the North American business’s net sales from $11 billion in 2023 to over $20 billion by the end of the decade. Holcim, through its 2014 merger with the French company Lafarge, is the world’s biggest cement company.

Its rival CRH, the world’s largest building materials group, switched its primary listing from New York to London in 2023 and through this process saw the value of its shares appreciate by almost 50% to $49.8 billion. The market capitalisation of Holcim is currently $43.1 billion.

 

Operational Landscape

With approximately 850 sites and 16,000 employees across the US and Canada, the North American business has strategically built its presence through acquisitions, including the recent acquisition of Firestone Building Products from Japan’s Bridgestone Corporation for $3.4 billion in 2021.

Sustainable Business Practices

Holcim, including its Nigerian subsidiary Lafarge Africa, recognizes the importance of sustainability. The company plans to drive growth through “Decarbonisation and M&A” even after the North American spin-off, aligning with global environmental consciousness.

Continued Presence in Nigeria and Beyond

Holcim will maintain a significant presence across Europe, Asia, the Middle East, Africa, and Latin America, reflecting its global reach and strategic positioning. The Nigerian Holcim subsidiary remains listed as Lafarge Africa.

 

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