Swiss cement maker Holcim Ltd. won the support of corporate governance adviser International Shareholder Services for its planned merger with French rival Lafarge SA, a move that may help secure approval for the deal at a investor meeting next month.
The combination has a clear strategic rationale and potential savings accruing to Holcim investors could reach as much as 20 percent of its market value, excluding revenue and investment synergies, ISS said in a note. The announcement is “another step forward” said Peter Stopfer, a spokesman for Jona-based Holcim.
Two-thirds of Holcim’s investors need to approve a capital increase for the deal to go through, and it’s not clear yet how the second-biggest shareholder, Eurocement, controlled by Filaret Galchev, will vote. Holcim earlier this month risked alienating the investor after saying the Russian company’s proposal to get a board seat may have to wait.
Holcim gained as much as 1.2 percent in Zurich trading, while Lafarge added as much as 2 percent in Paris.
Thomas Schmidheiny, Holcim’s largest shareholder and the billionaire co-architect of the merger, supported the tie-up from the beginning. Harris Associates, which is Holcim’s third-biggest shareholder with 6.4 percent, this month said it’s leaning toward voting in favor of the deal.
“I believe it’s just a matter of time until Mr. Galchev joins the board after the deal closes,” Egyptian billionaire Nassef Sawiris, who is Lafarge’s second-biggest shareholder, said in a telephone interview. “His knowledge of the industry coupled with his sizeable investment in the new group ensures he would add a lot of value to the company.”
Lafarge and Holcim already had to tweak the original merger agreement in March to win over Holcim investors who were unhappy about the performance of the French company since the deal was agreed last year. Holcim 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 new group.