Holcim, Lafarge agree on chief to run merged company
CEMENT MAKERS Holcim and Lafarge agreed to appoint Eric Olsen to lead their combined operation as they seek to overcome lingering opposition from some shareholders to their planned merger.
The nomination of Olsen, who is Lafarge’s executive vicepresident of operations, as chief executive was approved by the boards of both companies, they said in separate statements yesterday.
The companies needed to find a new chief executive candidate after some Holcim shareholders demanded changes to an initial agreement that would have installed Lafarge chief Bruno Lafont as head of the new $48 billion (R567bn) entity, which will be the world’s biggest cement maker. Switzerland’s Holcim questioned the ability of the executive to reach savings targets after the results of France’s Lafarge trailed those of its merger partner.
Olsen’s “appointment will tick a number of boxes for concerned investors”, analysts at Davy Research said. “He brings important operational experience, as well as experience of integrating businesses. The appointment is another important step for the two groups in getting the deal over the line.”
Olsen, who has both French and US nationality, joined Lafarge in 1999. The 51-year-old executive, who started his career at consulting firm Deloitte & Touche, holds a degree in finance and accounting, as well as an MBA.
In his current role, he is responsible for Lafarge’s operations in major markets such as France, the US, Brazil and Egypt. He has led the integration of Egypt’s Orascom, a major acquisition with operations in Africa, Middle East and Asia, and also oversaw an organisational revamp in 2012.
Holcim gained 2.1 percent in Zurich as of 11.02am, while Lafarge rose 2.8 percent.
Olsen was one of two candidates to lead the new entity, with Lafarge chief financial officer Jean-Jacques Gauthier being the other contender, two people with knowledge of the matter said last month.
“With his broad international experience and insights in key markets, he is best positioned to lead the combined company for the benefit of employees, shareholders and customers,” said Wolfgang Reitzle, who is Holcim’s chairman and set to continue in that role at the merged company.
The companies agreed on March 20 to make Lafont the co-chairman of LafargeHolcim along with Reitzle and give the Swiss company a bigger stake in the new entity, leaving open the contentious question of who would be chief executive.
The deal still faces opposition from some shareholders including Eurocement, the Russian cement maker controlled by billionaire Filaret Galchev and Holcim’s secondbiggest investor with a 10.8 percent stake.
Other investors such as Thomas Schmidheiny, Holcim’s largest shareholder and the billionaire co-architect of the merger, support the tie-up.
Ethos foundation, which advises Swiss pension funds, said that it still had doubts about the combination, and large shareholder Harris Associates told newspaper Finanz und Wirtschaft that the new terms were “not perfect”.
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.
Reitzle yesterday reiterated his backing for giving Eurocement a board seat to win over the Russian investor. He also said Olsen would seek to meet with Harris Associates soon, adding that he saw a “good chance” to get the shareholder’s support.
“We are confident that we will win sufficient votes for the deal.”
There were no current talks with Eurocement about asset deals, the executive said when asked whether Lafarge and Holcim would be ready to sell some cement operations in Russia to Eurocement to get support for the merger. – Bloomberg