Geneva: The USD 40-billion mega merger between Holcim and Lafarge to create world's largest cement group has hit a roadblock with Swiss giant Holcim rejecting the deal in the present form, including on 'governance issues'.
Both the companies have significant presence in India and the deal, which was being billed as "merger of equals", is yet to get anti-trust clearance in India. Plans to combine Holcim and Lafarge were announced in April 2014. The combined entity would have sales of USD 40 billion and operations in 90 countries.
"Holcim Board of Directors has concluded that combination agreement can no longer be pursued in its present form and has proposed to enter into negotiations in good faith around the exchange ratio and governance issues.
"Lafarge has indicated that it refuses to renegotiate except the exchange ratio," said the Swiss building material major in a statement.
Paris-based Lafarge said through a letter Holcim has indicated its Board's decision "not to pursue the execution of the combination agreement under the terms approved by Boards of Directors of Lafarge and Holcim and concluded on July 7, 2014 and challenging financial terms and governance structure of the proposed merger of equals."
"Lafarge's Board of Directors remains committed to the project that it intends to see implemented. The Board said it is willing to explore the possibility of a revision of the parity, in line with recent market conditions, but it will not accept any other modification of the terms of the existing agreements," it said in the statement
Holcim also said that its Board has decided that agenda for the Annual General Meeting of April 13 will only contain topics related to the company.
"This decision has been taken due to pending antitrust clearance in the US and India, pending EU approval of CRH as purchaser of divested assets as well as delays in the social process in France," it added.
