Cement groups Lafarge, Holcim in $50nillion-plus merger talks

viernes 4 de abril de 2014 13:28 GYT

By Natalie Huet and Alice Baghdjian

PARIS/ZURICH (Reuters) - The worlds' two largest cement makers, Lafarge LAFP.PA and Holcim HOLN.VX, are in advanced talks to merge into a company with a stock market value of over $50 billion (30 billion pounds) in what would be the industry's biggest ever tie-up.

The discussions, which are likely to draw close scrutiny from European competition watchdogs, are "based on principles consistent with a merger of equals", Paris-listed Lafarge said in a statement on Friday.

The company said no agreement had yet been reached with Switzerland's Holcim and that there was no guarantee of a deal, but said there was a "strong complementarity" and "cultural proximity" between the two.

Shares in Lafarge rose 8.9 percent to a 4 1/2 year high, the top gainers on the French blue-chip CAC 40 index .FCHI. Holcim stock rose 6.9 percent to a near four year high.

Such a merger would be Europe's biggest tie-up this year, Thomson Reuters data shows, based on the cost to acquire the target and assuming that Lafarge, with the smaller market value, is the target company.

A deal would allow Lafarge and Holcim to slash costs, trim debt and reduce worldwide overcapacity that has weighed on the market in recent years.

But any deal is likely to draw scrutiny from European competition watchdogs, as a Lafarge-Holcim entity, with combined sales of over 30 billion euros, would have a dominant position in both Europe and the United States.

"I think this will be a story that develops over a year or more," said Morningstar analyst Elizabeth Collins, adding that antitrust regulators would likely require the companies to shed cement plants and distribution facilities before approving any merger.   Continuación...