Construction BUSINESS

Shares in Iseq heavyweight CRH jumped by nearly 4 per cent on Wednesday after reports that cement makers Holcim and Lafarge, are discussing a new CEO appointment to the combined group.

The move would see current Lafarge boss Bruno Lafont shift into a new role, as talks continue to save their troubled merger.

There is pressure to find an accord soon because CRH, which is supposed to buy a chunk of European assets from Lafarge and Holcim to help them get antitrust clearance, has a shareholder meeting scheduled for Thursday to ratify the acquisition.

When the merger as announced in April 2014, Mr Lafont was presented as the future chief executive of what would be the world’s biggest cement maker, but the Swiss side has since grown dissatisfied with his leadership and threatened to walk away if the issue is not resolved, the people said.

“The discussions are ongoing on all aspects of the deal, on the share exchange ratio and the governance,” said one of the sources.

A second source said that Holcim was not calling into question that the marriage of the two groups was of equals – a concept that underpinned the deal’s price and terms and allocated seven seats for each side on the board.

“This is not about the balance of the merger this is about one person,” the second person said.

Another source said Mr Lafont could be named co-chairman of the future company, alongside Wolfgang Reitzle, the current chairman of Holcim.

Mr Lafont’s brash style and tendency to brook no dissent among his management or with investors has proven difficult for the Swiss side to accept, said the sources. A third person characterised the conflict as a cultural one, with Lafont emblematic of an imperialistic French CEO style and Holcim as a more consensual organisation.

Holcim and Lafarge presented the deal originally as a merger of equals with a one-for-one share swap, which would leave Holcim 53 per cent of the new group.

But as the two sides spent months working on asset sales to get regulatory approvals, the performance of the two groups diverged, leading Holcim, under pressure from its shareholders, to call a halt to the deal under its old terms on Sunday with a letter to the Lafarge board.

It demanded better terms on the share exchange ratio and changes to the “governance” of the new group.

The decision to try to find a new role for Mr Lafont within the combined group came about on Tuesday after the two largest shareholders of Lafarge, who together own 37 per cent of the shares and hold 5 board seats, pushed for the French group to open discussions to save the deal, the third person said.

Belgian investors Paul Desmarais and Albert Frere own 21 per cent of Lafarge via a holding company, while Egyptian businessman Nassef Sawiris owns 16 per cent.

Shares of Lafarge rose 6 per cent on Wednesday after the Reuters report, making them the largest gainer on the blue-chip index. Holcim rose 2.25 per cent.

An agreement could be found between Holcim and Lafarge and announced by later on Wednesday or Thursday, two of the sources said.

CRH shares were up 3.9 per cent to €24.36 in trading at lunchtime.

Reuters.