Sawiris Spends $10 Million on LafargeHolcim in Rebound Bet

  • Egyptian billionaire buys shares he says are undervalued
  • Sawiris says he's 'strong believer' in merger of companies

Egyptian billionaire Nassef Sawiris, the third-biggest shareholder of LafargeHolcim Ltd., purchased more than 10 million Swiss francs ($10.3 million) in stock, in a bet that shares in the world’s biggest cement maker will recover.

Sawiris, through his investment vehicle NNS Holding, acquired the shares on March 18 and 21, he said in a telephone interview Wednesday and Swiss regulatory filings.

“The share price is clearly undervalued and does not reflect the potential synergies or revival of the company’s pricing strategy,” Sawiris said. “We are a strong believer in the value proposition created by the merger.”

LafargeHolcim has lost 39 percent of its value since trading began in July, faring far worse than HeidelbergCement AG, the region’s No. 2, and the Stoxx 600 Construction & Materials Index. Shares closed 2.2 percent higher in Zurich on Wednesday at 43.92 francs, giving the cement maker a market capitalization of 27 billion francs.

Lafarge SA of France and Switzerland’s Holcim Ltd. combined last year with the promise of more than $1 billion in annual cost savings, giving them an advantage over rivals after a global recession eroded demand for building materials. Since then, Chief Executive Officer Eric Olsen has had to cope with a slowdown in China and Brazil, management departures and delays in the sale of some assets that have weighed on the share price.

“I have full confidence in the CEO’s strategy and his clear emphasis on cash-flow generation and a commercial strategy that favors pricing over volume,” Sawiris said. “He is introducing changes that will trim the bloated corporate structures prior to the merger and he’s adopting a new commercial and marketing strategy that prices the products to achieve a fair return on its asset base.”

The Jona, Switzerland-based company reported a fourth-quarter loss of 2.9 billion francs due to a charge of 3 billion francs from “changing market conditions” in Brazil, Russia, Iraq and China. LafargeHolcim said last week that market demand is expected to grow in 2016.

Sawiris also runs Dutch fertilizer producer OCI NV, which last year agreed to sell its European and North American nitrogen-fertilizer assets to CF Industries Holdings Inc. in a transaction valued at about $8 billion.

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