North America's Top Cement Giant Spins Off for $30B Valuation

29 Jan, 2024

North America's Top Cement Giant Spins Off for $30B Valuation

Holcim Ltd., the world’s largest cement maker, announced plans on Sunday to divide its rapidly expanding North American business, setting the stage for a listing in the US valued at over $30 billion next year.

The Swiss company, known for its building materials, also appointed Miljan Gutovic, currently head of its European operations, as the new CEO, effective May 1, succeeding Jan Jenisch, who will continue as chairman.

Jenisch, speaking in a conference call following the announcement, stated that a valuation exceeding $30 billion aligns well with the unit’s worth. Holcim's shares surged by 38% last year, reaching their highest point since 2015 in December and closing at 64.20 francs on Friday.

The separation into two independent entities is anticipated to be beneficial for shareholders, according to Jenisch. This move marks the conclusion of an era of Holcim's global acquisitions, driven by differing regulatory landscapes in North America and Europe. In 2022, North America contributed over a third of the company's revenue, amounting to $11 billion.

The US market, experiencing rapid growth amidst efforts to address housing shortages and enhance energy efficiency in buildings, has been a focal point of expansion for Holcim’s North American arm, bolstered by strategic acquisitions in the building materials sector.

The listing process on the New York Stock Exchange is estimated to take approximately 15 months, with current shareholders set to receive shares in both the European and US entities. Management appointments, including that of the US CEO, are slated to be finalized by the first half of 2025.

Gutovic, who has been instrumental in Holcim’s initiatives to reduce carbon emissions, brings significant experience to his new role. Holcim, under Jenisch's leadership, has transitioned away from traditional cement production in response to environmental pressures and market dynamics, while strategically divesting from certain emerging markets.

Looking ahead, Holcim remains focused on growth, eyeing potential acquisitions and transformational deals to further strengthen its position in the global market. Earnings for the company are expected to be reported on Feb. 28.