Holcim and Lafarge: Into the mixer

THE announcement this week that the world’s two biggest cement-makers by revenues are planning a merger of equals has thrust a huge but unglamorous industry into an unaccustomed spotlight. If a deal goes ahead, combining Lafarge of France and Holcim of Switzerland will create a giant firm worth around €43 billion ($60 billion) with operations in 90 countries and 20% of the global market outside China.Cement-making is a local business that needs heaps of capital to build the big plants that churn out the stuff. Chinese firms have been happy to serve a domestic economy that gobbles up 60% of the world’s cement. But Western ones have suffered falling demand in mature home markets, bringing overcapacity and falling returns. To keep margins up they have expanded in emerging markets where construction has been booming.By teaming up, Holcim and Lafarge can tackle some of their problems and better exploit some of their advantages. The pair expect to take a jackhammer to their costs. They hope to save €1.4 billion a year after three years together (though savings from mergers often fall short of their promise). Holcim’s strength in Asia and Latin America…

Link to article: www.economist.com/news/business/21600690-giant-cement-merger-seeks-transform-struggling-industry-mixer?fsrc=rss|bus

Leave a Reply

Your email address will not be published. Required fields are marked *

Time limit is exhausted. Please reload the CAPTCHA.