Irish construction group CRH said Monday morning that it has noted comments from French cement company Lafarge that it's willing to consider revising the share-exchange ratio in its planned merger with Holcim of Switzerland though it's not willing to accept any other changes to the deal.
CRH had previously agreed to acquire assets disposed of by Lafarge Holcim and it will hold an egm on March 19th 2015 to approve this acquisition. The stock fell by 3.1 per cent in early Dublin trading.
Lafarge received a letter from Holcim March 15 that said the Swiss cement maker doesn’t intend to pursue the transaction under the terms agreed last July, Lafarge said in an e-mailed statement on Monday.
“Lafarge’s board of directors remains committed to the project that it intends to see implemented,” the Paris-based company said.
Holcim said in a separate statement that it’s willing to enter into negotiations in “good faith around the exchange ratio and governance issues.”
The plans to form the world’s biggest cement maker were announced to great fanfare in April 2014, with the heads of both companies lauding the creation of an entity with sales of $40 billion and operations in 90 countries.
Since then, Holcim has outperformed Lafarge on everything from sales to profit, prompting some investors in the Swiss company to call for a bigger stake in the new entity.
Holcim has already proposed changes to the share-exchange ratio and management as the two companies try to save the deal, people familiar with the matter said yesterday.
Under the original agreement, Holcim was planning a capital increase to create new shares and to give one of those to Lafarge in exchange for one share of the French company.
Under the new proposal, Holcim would give 0.875 of a share in exchange for one Lafarge share, said the people, who asked not to be identified because negotiations are private.
Lafarge has signaled it will make a counter proposal that would trim its weighting to 0.93 to get the deal done, the people said.
Holcim is also pushing for a change in management including the chief executive officer of the merged company, one of the people said.
Bruno Lafont, the chief executive of Lafarge, had been picked to lead the new entity.
Representatives for the companies are scheduled to meet as early as today as they try to reach a compromise as early as this week, the people said.
Bloomberg
