Switzerland’s Holcim plans to spin off US cement business

The Swiss cement giant Holcim plans to spin off its North American business and list it in the US, as it seeks to unlock value and speed up growth for the unit.

The Zug-based group also announced that the head of its European business, Miljan Gutovic, would take over as group chief executive from May. Outgoing chief Jan Jenisch will remain chair and lead the planned break-up.

“We are too successful in North America, we are too big to manage this as a subsidiary,” Jenisch 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 France’s Lafarge and Switzerland’s Holcim, a deal that created the world’s largest cement company. But the combination was complicated by competing egos among senior leadership, and an earlier scandal involving payments by Lafarge to terrorist organisations in Syria dogged the company in the wake of the deal.

Holcim’s shares subsequently struggled to gain ground. Under the plan laid out on Sunday, Holcim will complete a “full capital market separation” of its North American business, with the final structure of the spin-off due to be finalised later this year and the US listing expected to complete in the first half of 2025 once shareholder approval has been obtained.

European companies have looked to US listings for the higher valuations and greater market liquidity and analyst coverage they can bring. CRH, the world’s largest building materials group, last year moved its primary listing from London to New York. Its shares have climbed almost 50 per cent over the past year, with CRH now valued at £39.2bn ($49.8bn).

Although Holcim has a market capitalisation of about SFr37.2bn ($43.1bn), Jenisch said the North American business could be valued in the “ballpark” of $30bn despite just accounting for about 40 per cent of sales last year.

The North American business is estimated to have generated about $11bn of net sales in 2023, but the company said it aimed to increase that to more than $20bn by the end of the decade as it sought to capitalise on a boom in construction and US infrastructure investment sparked by Biden administration policies.

It has about 850 sites and 16,000 employees across the US and Canada, and has built up the North American business with acquisitions. It agreed to buy Firestone Building Products from Japan’s Bridgestone Corporation for $3.4bn in 2021.

The company had a “pipeline of acquisition projects” in the US, Jenisch told the FT. Having US-listed shares to help fund acquisitions would further aid the North American business’s dealmaking efforts, he said.

“Decarbonisation and M&A” would also drive growth at the Swiss-based business after the spin-off, the company said.

Makers of building materials such as Holcim have fallen out of favour with more climate-conscious investors in recent years, because of the carbon footprint of products such as cement and concrete. Holcim has sought to shift its business towards greener construction in recent years, and emphasised its role in “decarbonising building”.

Holcim will remain listed in Switzerland after the spin-off, with a presence across Europe, Asia, the Middle East, Africa and Latin America.