Paris/Zurich: Cement makers Holcim Ltd and Lafarge SA agreed to appoint Eric Olsen to lead their combined operation as they seek to overcome lingering opposition from some shareholders to their planned merger.
The nomination of Olsen, who’s Lafarge’s executive vice president of operations, as chief executive officer was approved by the boards of both companies, they said in separate statements on April 9.
The companies needed to find a new CEO candidate after some Holcim shareholders demanded changes to an initial agreement that would have installed Lafarge chief Bruno Lafont as head of the new $48 billion entity, which will be the world’s biggest cement maker. Switzerland’s Holcim questioned the ability of the executive to reach savings targets after the results of France’s Lafarge trailed those of its merger partner.
Olsen’s “appointment will tick a number of boxes for concerned investors,” Davy Research’s analysts said. “He brings important operational experience as well as experience of integrating businesses. The appointment is another important step for the two groups in getting the deal over the line.”
Olsen, who has both French and US nationality, joined Lafarge in 1999. The 51-year old executive, who started his career at consulting firm Deloitte & Touche, holds a degree in finance and accounting from the University of Colorado and an MBA from the HEC business school in Paris.
Merger Expert
In his current role, he’s responsible for Lafarge’s operations in major markets such as France, the US, Brazil and Egypt. He has led the integration of Egypt’s Orascom, a major acquisition with operations in Africa, Middle East and Asia, and also oversaw an organizational revamp in 2012.
Holcim gained 0.7 per cent in Zurich trading as of 9.02am, while Lafarge rose 0.9 per cent in Paris.
Olsen was one of two candidates to lead the new entity, with Lafarge Chief Financial Officer Jean-Jacques Gauthier being the other contender, two people with knowledge of the matter said last month.
“With his broad international experience and insights in key markets, he is best positioned to lead the combined company for the benefit of employees, shareholders and customers,” said Wolfgang Reitzle, who’s Holcim’s Chairman and set to continue that role at the merged company.
The companies agreed on March 20 to make Lafont co-chairman of LafargeHolcim along with Reitzle and give the Swiss company a bigger stake in the new entity, leaving open the contentious question of who would be CEO.
Not perfect
The deal still faces opposition from some shareholders including Eurocement, the Russian cement maker controlled by billionaire Filaret Galchev and Holcim’s second-biggest investor with a 10.8 per cent stake. Other investors such as Thomas Schmidheiny, Holcim’s largest shareholder and the billionaire co-architect of the merger, support the tie-up.
Ethos foundation, which advises Swiss pension funds, has said that it still had doubts about the combination, and large shareholder Harris Associates told newspaper Finanz und Wirtschaft that the new terms are “not perfect.”
Two-thirds of Holcim’s shareholders need to approve a capital increase that is necessary for the deal to go through at an investor meeting. Lafarge’s annual general meeting is on May 7, one day before the Swiss company meets.
Holcim and Lafarge have predicted the merger will lead to cost savings of 1.4 billion euros ($1.5 billion) annually, giving them an advantage over rivals after a global recession eroded demand for building materials and forced some kilns to run at a loss.
