Snow-covered mountains stand in the distance beyond silos at a cement depot, operated by Holcim Ltd., in Oberdorf, Switzerland, on Monday, April 7, 2014.Philipp Schmidli/Bloomberg
Holcim Ltd. and Lafarge SA's plan to create the world's biggest cement maker was approved by the European Union subject to the sale of overlapping operations in more than half a dozen countries.
The EU's conditions represent "a very slight change" compared with sales offered by Holcim and Lafarge in October, adding only the divestment of a plant in Saint-Nazaire, France, the companies said in a statement.
A merger of the Swiss and French companies will combine cement and crushed-rock operations with $40-billion in annual revenue. To gain regulatory approval the cement makers needed to dispose of operations worth as much as €7-billion ($8.7-billion), people familiar with the companies' plans have said.
"With the remedies, we have ensured that the creation of an increased global footprint of the group will not come at the expense of competition," EU Competition Commissioner Margrethe Vestager said in a statement.
The EU's decision is conditional upon the divestments of Lafarge businesses in Germany, Romania and the U.K. and of Holcim units in France, Hungary, Slovakia, Spain and the Czech Republic, the regulator said. The deal can only go through after the EU approves the buyer or buyers for these assets.
Jona, Switzerland-based Holcim and Paris-based Lafarge said in the statement that the deal is expected to close in the first half of 2015. They said they "continue to actively pursue negotiations for the sale of these assets with potential buyers."
Major Milestone "Europe is the most important area for this merger in terms of potential regulatory issues and, post-deal, a major source of synergies," said Ian Osburn, an analyst at Cantor Fitzgerald in London. "That makes the ruling today a major milestone on the road to getting the merger completed."
Holcim said last month that it expects to get approval in all 20 jurisdictions required for the merger by the end of February. Bidders are completing due diligence and final bids will be handed in next month.
Lafarge will divest all of its German and Romanian business activities, the EU said. Holcim will unload all of its Slovak business and most of its activities in France, the regulator said. The companies get to keep Holcim's Altkirch cement plant and aggregates and ready-mix sites in the Haut-Rhin region.
Lafarge will divest a grinding station and its business activities on the French island of Reunion, except its stake in the Ciments de Bourbon grinding station, the commission said.
In the U.K., Lafarge will sell its operations carried out through Lafarge Tarmac, a joint venture with Anglo American PLC, except the Cauldon cement plant in Staffordshire, the EU said.
Holcim will also divest the entirety of its business activities in the Czech Republic, as well as the Gador plant and the Yeles grinding station in Spain, the commission said.