Thursday, January 07, 2021
LafargeHolcim buys US company
Cement giant wants to become the flat roof market leader
The Swiss building materials group LafargeHolcim is strengthening one of its pillars with a billion-dollar acquisition. With the takeover of a US flat roof specialist, the group aims to become a dominant player in what is currently a 50 billion dollar market.
The cement giant LafargeHolcim enters the flat roof business with the largest acquisition in more than ten years. The Swiss company Firestone Building Products is taking over the Japanese tire manufacturer Bridgestone for 3.4 billion dollars. "We want to become the market leader in flat roof systems," said CEO Jan Jenisch. Firestone is currently number four worldwide. In addition to the previous main market, the USA, Jenisch sees great potential in Latin America and also in Europe. One of the competitors in the business is his former employer Sika.
Since taking office in 2017, Jenisch has set an example at LafargeHolcim primarily with a reorganization, debt reduction and the sale of business areas in emerging markets. But now the German puts in forward gear. With the acquisition, the group, which has previously mainly been active in the cement, ready-mixed concrete and aggregates sectors, is expanding its fourth pillar, "Building Solutions".
This was only possible through a major acquisition. "We needed a platform with technology and an innovative range of products to move into this fourth segment and that is exactly what the Firestone business offers us."
Firestone manufactures and sells individual components such as moisture barriers and insulation, but also entire packages. The US company also offers solar roofs, such as those installed by cell phone manufacturer Apple on its circular headquarters. Then there would be green roofs. The company with 1900 employees and its headquarters in Nashville, Tennessee, is benefiting from the trend towards energy efficiency and sustainability.
Buy to green
In view of its high carbon emissions, the cement industry has been repeatedly pilloried by critics and shunned by investors. With the acquisition, the HeidelbergCement rival can now increase its share of environmentally friendly businesses.
Firestone had sales of around $ 270 million last year, making it around ten times smaller than the new parent company. According to Jenisch, the global flat roof business currently has a volume of 50 billion dollars. The highly fragmented market, in which Firestone currently has a share of four percent, is expected to grow to 65 billion by 2027.
"At first glance, the takeover looks overpriced," explained Vontobel analyst Bernd Pomrehn. But if it is a transformative takeover that offers a great opportunity for accelerated growth. LafargeHolcim rose 1.8 percent on the stock exchange.
The group expects the transaction, half of which will be financed with cash and half with new bonds, to be completed in the second quarter. The acquisition will have a positive impact on LafargeHolcim's earnings per share from year one.
.