Holcim Investor Harris Leaning Toward Supporting Lafarge Deal

A key shareholder of Swiss cement maker Holcim Ltd. said it will probably support the merger with French rival Lafarge SA, signaling that the two companies are overcoming lingering opposition from some investors

Harris Associates, which owns 6.4 percent of Holcim, is “leaning” toward voting in favor of the cement merger, its fund manager David Herro said by e-mail on Wednesday, adding that no final decision has been made and that the shareholder could still change its mind.

The companies tweaked the original merger agreement in recent weeks to win over Holcim investors who were unhappy about the performance of Lafarge since the deal was agreed last year. The Swiss company will now have a bigger stake in the new entity, and the cement makers also appointed Eric Olsen to lead their combined operation after Holcim shareholders opposed Lafarge CEO Bruno Lafont as head of the $48 billion group.

The deal still faces opposition from some investors including Eurocement, the Russian cement maker controlled by billionaire Filaret Galchev and Holcim’s second-biggest investor with a 10.8 percent stake. Others, such as Thomas Schmidheiny, Holcim’s largest shareholder and the billionaire co-architect of the merger, support the tie-up.

Two-thirds of Holcim’s investors need to approve a capital increase that is necessary for the deal to go through. Lafarge’s shareholder meeting is on May 7, one day before the Swiss company convenes.

Holcim and Lafarge have predicted the merger will lead to cost savings of 1.4 billion euros ($1.5 billion) annually, giving them an advantage over rivals after a global recession eroded demand for building materials and forced some kilns to run at a loss.

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