Building materials group CRH is working on the basis that the troubled merger of industry giants Lafarge and Holcim will happen, its CEO said as shareholders approved asset purchases that depend on the deal going ahead.
The Irish-based group has agreed to buy a number of mostly European assets from Lafarge and Holcim for €6.5 billion so the French and Swiss firms can get competition clearance for their plan to create the cement industry's biggest company.
"At this moment in time, we're working forward on the basis that the deal will close, the merger will happen," CRH CEO Albert Manifold said after an EGM today.
He added that he was in constant contact and had spoken to both companies this morning.
CRH shareholders voted in favour of the €6.5 billion acquisition which would make it the world's third-biggest building materials supplier.
It employs about 76,000 people at over 3,300 locations worldwide.
Mr Manifold said the CRH vote was a procedural step that had to be done, regardless of the uncertainty at Lafarge and Holcim, as a failure to approve the asset purchase would have left CRH exposed to a potential €158m euro break-up fee.
"Likewise, if other parties don't conclude this deal for whatever reason, we would then be in receipt of a break fee," he said.
"I'm not going to speculate on whether it is or isn't going to happen. There are discussions going on in Paris or Zurich today to decide what they want to do over the next couple of days," Mr Manifold said.
He added that CRH was interested in buying the assets regardless of whether the mega-merger was completed or not.
EU competition regulators will rule by April 27 whether to approve CRH's plan to buy assets from Lafarge and Holcim, the European Commission said today.
Lafarge major shareholder says talks with Holcim on track
Talks to save the Lafarge-Holcim deal were "progressing well" and would not fail, a key Lafarge shareholder said, joining the French firm's beleaguered boss in insisting it must remain a merger of equals.
Three days after news broke that Switzerland-based Holcim wanted to renegotiate terms, the parties were still locked in talks about who should be in top management positions.
"What is being discussed now, with the support of both boards and all key shareholders, is to restore a transaction that is to the letter of the word a merger of equals," said Nassef Sawiris, the second-biggest shareholder and board member.
Lafarge chief executive Bruno Lafont told an internal meeting of about 60 executives that he still wanted the merger to go ahead, said a source familiar with the situation.
"I want this merger to take place and to succeed, widely fuelled by the strength of Lafarge," Mr Lafont told the group.
"I will not let cheap tricks jeopardise the introduction of a unique group in our industry," he added.
Lafarge and Holcim agreed to create the world's biggest cement firm almost a year ago in a tie up that made Mr Lafont the CEO and offered a 1-for-1 share exchange ratio with seven board members to come from each side.
But Holcim shareholder discontent has grown this year as the companies earnings outlooks diverged and the conflict broke into the open on Monday.
Holcim said it was contesting the deal terms and the leadership of the new firm and warned it would not go forward if the share exchange ratio and governance were not revised.
Mr Lafont's planned nomination as chief executive of the new company has become unacceptable for the Swiss, sources said.
In his address to the assembled country managers, Mr Lafont also said that balanced governance between the two sides was necessary in order to deliver on the promised merger of equals that the deal was supposed to be.
Negotiations were focused on making Mr Lafont the co-chairman alongside Wolfgang Reitzle, the current chairman of Holcim, sources said earlier this week.
Mr Sawiris declined to comment on the ongoing negotiations.
"As a shareholder I am supporting a transaction where Bruno Lafont plays a major role in new entity, and I believe that Holcim is of the same mind," he added.
"The CEO will be Lafont's handpicked successor," he said, refusing to say who it would be.
Mr Sawiris owns 16% of Lafarge that he acquired when the French group bought his family's cement group Orascom in 2007.
