Investors hopeful of Eurocement support for Lafarge Holcim merger

  • Move seen as Eurocement getting behind deal
  • Holcim assessing its response
  • Shareholders to vote at May 8 EGM

Shares in cement makers Holcim and Lafarge rose on Thursday on hopes investors will approve their planned merger after the Swiss firm’s No. 2 stakeholder Eurocement nominated its owner Filaret Galchev for a seat on the board.

Zurich-based Holcim needs the backing of two-thirds of its shareholders at an extraordinary general meeting (EGM) on May 8 to finance the fusion of the firms, which together would have reported a pro-forma net profit of 1.579 billion euros ($1.68 billion) in 2014.

Eurocement Holding, which holds a 10.8 percent stake in Holcim, has expressed concerns about the terms of the deal, but late on Wednesday said it would nominate its owner Filaret Galchev for a position on the board of the combined group.

The nomination of Galchev in an emailed statement may signal that Eurocement is softening its resistance to the merger, though the firm gave no indication that it accepts the current terms of the deal.

The nomination sent shares in Lafarge up 3.5 percent and Holcim shares up 2 percent by 0900 GMT on Thursday.

“We expect today’s announcement will be interpreted by the market as if the deal is done, as a ‘yes’ vote from Eurocement would be enough to seal the deal,” analysts at Bernstein said in a note. “In our view, although still not certain, the probability of the deal proceeding has now significantly increased.”

Holcim is now assessing the options of how the proposal could be implemented, a company spokesman said on Wednesday.

Galchev’s name was neither on a list of candidates for the post-merger board released on Tuesday, nor listed in the invitation to the EGM published earlier on Thursday.

Holcim’s chairman said earlier this month the firm was open to giving the Russian businessman a seat.

At that time, a Eurocement source told Reuters a seat on the board would be of interest, but that Galchev was still seeking further improvement to the deal’s exchange ratio of nine Holcim shares for 10 Lafarge shares.

Provided shareholders back the deal, Holcim said on Thursday it expects the bulk of new shares of the combined company to be listed on exchanges in Zurich and Paris in mid July, with a second tranche to follow in early August.

Source

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