Holcim to offer shareholders merger sweetener?

Holcim is considering offering its shareholders a sweetener to win their approval for a planned merger with Lafarge, Reuters reported citing an article in a Swiss newspaper.

Analysts have seen a potential divergence in earnings outlooks between the two companies as opening the possibility of a renegotiation of the terms of the deal, which foresees each Lafarge share being swapped for one Holcim share.

Swiss weekly Sonntagszeitung reported, without citing a source that Holcim was looking at several "creative methods" to sway its shareholders into backing the deal, including a generous special dividend or a share buyback, instead of trying to alter the terms of the deal, which involves a one-to-one share swap.

But Holcim Chief Executive Bernard Fontana, when asked last week whether the Swiss firm's strong results could affect the exchange ratio, said the merger agreement did not contain any mechanisms by which the terms could be automatically adjusted.

Sonntagszeitung reported that Holcim was considering the sweetener in response to opposition from its shareholders to the deal, which hinges on investor approval for a capital increase for financing.