Holcim Ltd. and Lafarge SA will divest plants, terminals and an Iowa quarry to win U.S. regulatory approval for a merger between the European cement makers that will form the industry’s biggest producer.
U.S. regulators said the moves are needed to protect consumers from the deal, which will create a company valued at more than $46 billion. Competition would have been substantially lessened in 12 markets, including Detroit, Boston and New Orleans, the Federal Trade Commission said in a statement.
The agreement gives the agency the authority to appoint a monitor to oversee the sale of assets, which must be held separately pending final approval after a 30-day public comment period.
France’s Lafarge agreed to give up facilities in Iowa, Minnesota, Wisconsin, Tennessee and Louisiana.
Holcim, based in Switzerland, has buyers for cement plants and terminals in Illinois, New Jersey, Massachusetts and Michigan. The company also agreed to sell plants and terminals in Canada, Montana, Michigan, Ohio and New York, according to the FTC, which worked closely with the Canadian Competition Bureau while investigating the proposed deal.
Robin DeCarlo, a spokeswoman for Holcim, and Joelle Lipski-Rockwood, a spokeswoman for Lafarge, didn’t immediately respond to phone messages seeking comment.
Holcim and Lafarge have said the combined LafargeHolcim will produce savings of 1.4 billion euros ($1.5 billion) a year, providing an advantage over competitors after a global recession eroded demand for building materials and forced some kilns to run at a loss.
Holcim’s second-biggest shareholder, Eurocement Holding AG, agreed last week to back the merger. The company’s biggest investor, supported it from the beginning.
The companies tweaked the original merger agreement to get support from Holcim investors who were unhappy about the performance of Lafarge since the deal was agreed to 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 Chief Executive Officer Bruno Lafont as head of the new group.
Two-thirds of Holcim’s stakeholders need to approve a capital increase on May 8 for the merger to go through.