“Corporate moves will continue to be the main driving forces of markets for next months, thus supporting an expansion cycle which is already consolidating,” Spanish analysts at Bankinter said on Monday.
The merger of equals between the European and world’s largest cement manufacturers French Lafarge and Swiss Holcim has been announced earlier that morning on the grounds that combination of both companies’s bussinesses have an strategic sense.
Market watchers had been predicted for months that corporate moves would come at the time of first signs of economic recovery. They also said the first market to take action would be telecoms. They guessed both. Vodafone bought Ono just some weeks ago. Construction firms Lafarge and Holcim now take to the merger and acquisitions’ dance floor to create a world giant cement maker of $40 bn.
The two companies’ boards as well as major stakeholders agreed the operation fits both’s growth plans because they supplement to each other. Cultural proximity between France and Switzerland would make the merger more manageable. Furthermore, the transaction is to be performed as a public exchange offer which will be priced one Holcim’s share for each one of Lafarge.
The cement makers hold joint sales of €32 bn and an Ebitda reaching to €6.5 bn. They also estimate to achieve together about € 1.4 bn of sinergies in the next three years, a third of them just in the first year of jointly operation. The resulting company’s board of administration is to be equally participated by 7 members of the French and 7 fo the Swiss.
In addition, the new giant of cement’s value amounting $40 bn will likely arouse suspicions of European competition regulators since this building material’s market is almost led by the two involved companies in the merger, along with Mexican Cemex, HeidelbergCement and Italcementi. Lafarge and Holcim aim to disinvest around to 10-15% of their global Ebitda in order to meet eventual legal requirements.
“It remains yet to be seen these divestitures to be enough for competition authorities. If not, imposed limitations might be too high even to paralyze the merger,” experts at Banco Santander assured.
On the other hand, Europe’s tourism sector also moves. Arab Emirate’s airline Etihad is probably to bid €300 million for 49% of Italy’s Aliatalia, a stake in sale since long. Intesa and Unicredit would sell their 20% and 13% participations in the airline, while the remaining come to the market by a capital increase given that the company needs a new liquidity injection to become viable.
Finally, French media group Vivendi sold its mobile phone operator to also national Numericable instead of to Bouygues Telecom, which was was the preference of the country’s government. The resulting company is to rank second position in France’ s telecom market following Orange. This operation is another proof of the consolidation’s process in European telecom market.
So, who’s next to enter the mergers’ ballroom?