CEO Poker

Not Cementing the Deal

Holcimi is no longer cemented to the merger with Lafarge. Source: Bloomberg
Holcim is no longer cemented to the merger with Lafarge.
  • Why it matters

    Why it matters

    The companies’ fortunes have diverged since the deal was first announced, giving Holcim’s Mr. Reitzle a stronger position to renegotiate the original merger deal.

  • Facts

    Facts

    • Cement giants Holcim of Switzerland and French-based Lafarge proposed the merger in April 2014.
    • The original deal called for a one-to-one share swap, but Holcim now proposes 0.875 shares for one Lafarge share.
    • The Irish cement manufacturer CRH wants to buy plants that Lafarge and Holcim would have to give up in a merger.
  • Audio

    Audio

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After years in top management positions at BMW, Jaguar and German gas maker Linde, Wolfgang Reitzle is nowhere near retiring.

As supervisory board chairman of Swiss cement giant Holcim, the 66-year-old German is playing high-stakes poker in the merger between Holcim and France’s Lafarge, a major rival.

On Tuesday, Lafarge’s board of directors met in Paris to consider two changes that could be deal-breakers. Mr. Reitzle no longer wants a one-to-one share swap, and is pushing for more weight to be given to Holcim.

He also insists that Lafarge’s head, Bruno Lafont, not lead the merged company.

The Lafarge board of directors decided on Tuesday to defer action on the share swaps and leadership issues – so the cliffhanger continues.

The €40 billion ($43.51 billion) merger is ultimately a power struggle between Mr. Reitzle and Mr. Lafont. In the deal announced last year, Mr. Lafont would head the new cement giant. Now Mr. Reitzle wants to be rid of the Frenchman – and has the support of Holcim’s major shareholders, including its founder-heir Thomas Schmidheiny and the whole board of directors.

Frustration has built for months over Mr. Lafont, who some refer to as “Napoleon.” Sources at Holcim say he constantly goes behind the backs of the merger committee to challenge agreements. “No one on the Holcim board wants to work with him anymore,” said one source.

The dispute over share swaps seems less difficult. Holcim recently had better financial results than Lafarge, mostly due to building in the United States. Lafarge, on the other hand, is suffering because of the crisis in Europe and problems in Africa.

Instead of a one-to-one swap, Mr. Reitzle now suggests 0.875 Holcim shares for one Lafarge share. According to sources, Lafarge wants to move only to 0.93 Holcim shares for each Lafarge share, but an agreement still seems possible.

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