April saw the announcement of one of, or arguably, the biggest news items to hit the cement industry in some time. Following a preliminary statement confirming that they were in talks regarding a merger, Holcim and Lafarge officially declared their intention to form a ‘merger of equals’ as LafargeHolcim. Among the benefits of the deal, the companies list production and network optimisation opportunities, enhanced growth potential in developed and high growth markets, incremental synergies of over €1.4 billion over a three-year period, as well as a strengthened global presence with production facilities in 90 countries.
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As can be imagined, reaction to the news has been both vast and varied, with many pondering how the relevant competition authorities will respond to the proposed merger, particularly in light of recent reactions to M&A transactions. LafargeHolcim has stated that it will undertake ‘a pro-active divestment process’ in anticipation of regulatory requirements, leading many to speculate on where these divestments will take place and who will acquire the assets. In IA Cement’s report into the deal, Imran Akram asserts that the merger provides regulators with opportunities to increase market competition whilst allowing existing cement producers to expand into new markets and possibly encouraging the development of locally owned companies: ‘Emerging market cement groups have a perfect opportunity to either buy into the MNC’s, or pick up disposal assets from LafargeHolcim. 2014 just became a lot more exciting for the global cement sector!’
The merger of these two cement giants is, of course, major news and it has gained coverage across international media, some of which are more flattering about the cement sector than others. To quote one ft.com piece on the announcement, ‘The rather drab world of the cement industry…has been thrust into the spotlight…’* The author of this article was obviously not in attendance at the 2014 IEEE-IAS/PCA Cement Industry Technical Conference in Washington D.C., which was anything but ‘drab’. For us, one of the most encouraging moments of the event was meeting a group of students from MTSU’s Concrete Industry Management programme. Their enthusiasm for their chosen course, their work placements and job prospects, and the range of opportunities that a career in the cement and concrete industry has in store for them was especially heartening. As the impending skills shortage and the issue of recruiting young talent into the industry moves increasingly to the foreground, it is the optimism of students such as these, along with the efforts of the professors leading the programme, that will continue to drive exciting developments in the cement sector in the long-term.
You can find more details about the LafargeHolcim merger deal on page 12 and we will keep you informed of further developments via www.worldcement.com.