Spin-off of US business
Holcim wants to list its North American business on the stock exchange
January 28, 2024, 4:52 p.m
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The cement manufacturer Holcim is completely restructuring itself by spinning off its US business. The Swiss company wants to go public in the US as a completely independent company. Reports suggest it could be worth more than $30 billion.
The cement company Holcim is splitting up. As part of one of the largest transactions in the building materials industry in recent years, the Swiss company wants to separate its North American business and list it on the New York Stock Exchange.
Regarding a report in the Wall Street Journal that the deal could reach a market value of over $30 billion, Holcim boss Jan Jenisch said: “The magnitude seems right.” This means that the Heidelberg Materials rival, which currently has a market capitalization of 37 billion francs, is likely to increase significantly in value. With the renovation, Jenisch wants to crown his work at Holcim after taking over the top position in 2017.
Since then, the German has sold parts of the environmentally harmful cement business and expanded Holcim’s position with acquisitions, including in the roofing business. European boss Miljan Gutovic is set to take over the CEO position on May 1st. Jenisch will retain his role as Chairman of the Board of Directors and will also be responsible for the planned stock exchange listing of the North American business. It is not yet clear who will take the helm there.
“It’s a rock star business”
“The listing in the US will enable the newly created company to realize its full potential to be the partner of choice for our customers in one of the world’s most attractive markets for the construction industry,” said Jenisch. He is hoping for tailwind, among other things, from the construction boom and the infrastructure programs that only come once in a lifetime.
The North American business is “simply too successful to be managed as a subsidiary,” said Jenisch. It is the largest pure-play provider of building solutions in North America. “It’s a rock star business.” By 2030, the area is aiming for sales growth to more than 20 billion dollars, currently a good eleven billion dollars, and an operating result (EBIT) of over five (over two) billion dollars, with industry-leading margins.
In North America, Holcim operates plants at more than 850 locations in the areas of cement, aggregates, precast concrete and roofing. Holcim’s remaining business, which combines activities in Europe, Asia, Africa and Latin America, is expected to increase sales to around 22 (17) billion francs and EBIT to over four (2.7) billion francs by 2030.
Higher ratings than in Europe
The group was created in 2015 from the merger of the Swiss Holcim and the French Lafarge. Given the high transport costs relative to the selling price, heavy products such as cement or concrete are usually installed close to the factory. The advantages for a global provider are correspondingly small.
Holcim plans to announce the details of the transaction in the second half of the year. It is already clear that Holcim will no longer hold a stake in the North American business in the future. The shareholders should also become the shareholders of the new group. The owners should be able to vote on the transaction in the first quarter of 2025, and the IPO should then take place by the middle of next year.
“Industry players like Carlisle, Vulcan and Martin Marietta have very solid valuations, and I’m excited to move in that direction,” Jenisch said. With the US listing, Holcim is following an industry trend. The building materials group CRH moved from the Dublin stock exchange to the New York Stock Exchange in September. In many industries, companies listed in the USA have higher valuations than in Europe. Holcim expects that the remaining business will continue to be part of the Swiss benchmark index SMI.