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Swiss cement giant Holcim plans to spin off its North American business and list in the United States, as it seeks to unlock value and accelerate unit growth.
The Zug-based group also announced that the head of its European business, Miljan Gutovic, will take over as group CEO from May. Outgoing President Jan Jenisch will remain president and lead the planned separation.
“We are so successful in North America, we are too big to run this as a subsidiary,” Jinisch told the Financial Times. “We have all the tools, we have all the supply chain in place. But we needed more focused management.”
Holcim was formed nearly a decade ago from the merger of French companies Lafarge and Swiss Holcim, a deal that created the world's largest cement company. But competing egos among senior leadership and subsequent scandals have dogged the company since the deal, and Holcim shares have struggled to gain ground.
Under the plan laid out on Sunday, Holcim will complete a “full capital market spin-off” of its North American business, with the final structure of the spin-off scheduled to be finalized later this year, with the US listing expected to be completed in the first quarter of the year. Half year 2025 once shareholder approval is obtained.
European companies look to US listings for the higher valuations, greater market liquidity and analyst coverage they can achieve. CRH, the world's largest building materials group, last year moved its primary listing from London to New York. Its shares have risen by almost 50 percent over the past year, with CRH now worth £39.2 billion ($49.8 billion).
Although Holcim's market capitalization is about 37.2 billion Swiss francs ($43.1 billion), Jinisch said the company in North America could be valued in the “ballpark” of $30 billion even though it represents only about 40 percent of Sales last year.
The North American business is estimated to generate about $11 billion in net sales in 2023, but the company said it aims to increase that to more than $20 billion by the end of the decade as it seeks to capitalize on a boom in the U.S. construction sector. Infrastructure investment sparked by Biden administration policies.
It has about 850 locations and 16,000 employees across the United States and Canada, and has built its North American business through acquisitions. It agreed to buy Firestone Building Products from Japanese company Bridgestone for $3.4 billion in 2021.
Jinisch told the Financial Times that the company has a “pipeline of acquisition projects” in the United States. Having shares listed in the US to help fund acquisitions would further aid deal-making efforts in North America, he said.
“Decarbonisation and mergers and acquisitions” will also drive growth at the Swiss-based company after the spin-off, the company said.
Building materials makers such as Holcim have fallen out of favor with more climate-conscious investors in recent years, due to the carbon footprint of products such as cement and concrete. Holcim has sought to shift its business towards greener construction in recent years, and has emphasized its role in “decarbonising buildings”.
Holcim will remain listed in Switzerland following the spin-off, with a presence across Europe, Asia, the Middle East, Africa and Latin America.
