LafargeHolcim plans further asset sales

LafargeHolcim plans further asset sales
Published: 13 June 2016

Tagged Under: LafargeHolcim 

It has been revealed that LafargeHolcim is under pressure to find further synergies for the newly-formed cement major. LafargeHolcim was created by a EUR41bn merger last year but is stepping up its post-deal disposal programme with planned asset sales in an another nine countries, claims the Financial Times.

Eric Olsen, LafargeHolcim's chief executive, has been prompted by investors to boost the group's performance, which has been hit by severe global pricing pressures and weak economic growth in key markets, the newspaper claims.

Shareholders had been promised CHF3.5bn (US$3.6bn) of disposals this year. But the company now says a portfolio review has identified a further nine countries “where we will seek opportunities to divest if we can achieve favourable valuations”.

LafargeHolcim said it was confident of delivering this year’s target “and expects further divestments to crystallise beyond 2016.”

The group’s shares are almost 40 per cent lower than a year ago. Asset sales will help LafargeHolcim reduce net debt but analysts have warned that a rush to push through disposals would lead to lower sale prices.

“I don’t see how this process will create value - but that is the story of this merger so far,” said Phil Roseberg at Bernstein. “It is a very complex integration. You had two similar sized companies with two different cultures and now they want to create a third culture.”

So far this year, the group has already secured a third of its CHF3.5bn disposal target, through divestments in South Korea and Saudi Arabia and a merging of operations in Morocco. Competition authorities have also required additional asset sales in India.