Holcim and Lafarge in talks to save merger

<p>The two groups are allegedly discussing a new CEO appointment to the combined group.</p>

Cement makers Holcim and Lafarge are said to be discussing a new chief executive officer appointment to the combined group in a bid to save their troubled merger.

Current Lafarge boss Bruno Lafont – who was due to become the head of the merged organisation – would be transferred to a different role, sources quoted by Reuters said today (March 18th).

Swiss firm Holcim has allegedly grown dissatisfied with his leadership and threatened to walk away if the issue is not resolved.

The sources said Bruno Lafont could be named co-chairman of the future company, alongside Wolfgang Reitzle, the current chairman of Holcim.

Talks stalled last week

Reuters reports that Bruno Lafont's "brash style" and "tendency to brook no dissent among his management or with investors" has proven difficult for the Swiss side to accept.

The decision to try to find a new role for Lafont within the combined group came about yesterday after the two largest shareholders of Lafarge pushed for the French group to open discussions to save the deal, a source said.

Holcim and Lafarge have been in discussions to create the world's largest cement maker, but the former has put the brakes on the deal last week. Holcim said that the deal could not exist "in its present form" despite the two sides agreeing to the merger in April. The original merger gave Lafarge shareholders one Holcim share for each Lafarge share.

However, since then Holcim's shares have outperformed that of its French counterpart, which prompted Holcim to call off the current merger deals, that would create a company with a combined value of €32 billion (£22.8 billion).

Lafarge said that it was committed to the long-term value of the deal and said it would be looking into the "possibility of a revision of the party, in line with recent market conditions".

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.