CRH deal is in doubt as £30bn cement merger flounders
The £5bn sale of the UK's biggest cement maker to Ireland's CRH has been thrown into doubt after a setback in the merger of Lafarge and Holcim.
CRH, the parent company of Northstone NI, recently agreed to buy Lafarge Tarmac, which employs 6,600 staff at 330 sites and produces 45m tonnes of aggregates and 7m tonnes of asphalt a year, in a deal seen as key to smoothing the regulatory path for the €42bn (£30bn) merger of France's Lafarge and Switzerland's Holcim to create the world's largest cement group.
Last April the pair agreed the mega-merger in a deal where Lafarge shareholders received one Holcim share for each Lafarge share. But since then Holcim's shares have outperformed Lafarge's stock.
Holcim said it has "concluded that the combination agreement can no longer be pursued in its present form, and has proposed to enter into negotiations in good faith around the exchange ratio and governance issues."
Lafarge replied that it "remains committed to the project."
But it added: "The board said it is willing to explore the possibility of a revision of the parity, in line with recent market conditions, but it will not accept any other modification of the terms of the existing agreements."
The move throws into jeopardy Dublin-based CRH's acquisition which includes assets covering operations in Europe, North America and emerging markets. The rationale for selling the unit to CRH disappears unless the merger is completed.
CRH, which is Ireland's largest firm, noted the statements by Holcim and Lafarge and said that it still planned to hold its own shareholder meeting to approve the potential acquisition later this week.
The total deal is worth €6.5bn (£4.6bn) and will give CRH the number one market position in the UK in cement, aggregates, ready-mix concrete, asphalt and construction.
Lafarge Tarmac was formed in January 2013 following the merger of Anglo American and Lafarge's cement, aggregates, ready-mixed concrete, asphalt and asphalt surfacing operations in the UK.
number of staff cement maker Lafarge Tarmac employs across 330 sites