Bloomberg/Paris


Cement makers Holcim Ltd and Lafarge SA are discussing a change in the planned leadership of their combined company to rescue the $40bn merger amid growing resistance to Lafarge CEO Bruno Lafont taking the top job, according to people familiar with the matter.
The companies are considering naming another Lafarge executive as CEO instead of Lafont to address demands from Holcim that would allow the deal to go ahead, said the people, who asked not to be identified because the talks are private. Lafont could become co-Chairman of the new entity, together with Holcim Chairman Wolfgang Reitzle, they said.
The appointments are among various management changes being discussed and talks could still fall apart, the people said. Representatives for both companies declined to comment.
Holcim has been questioning Lafont’s ability to reach savings targets because Holcim has outperformed its French partner on everything from sales to profit since the deal was announced in April last year. Lafont and Holcim managers have also clashed over issues including leadership style and strategy, according to the people.
Holcim and Lafarge are also still negotiating a compromise on the exchange ratio of shares for the merger and are confident they can agree on a new number, the people said. Holcim said on March 16 that it wants Lafarge to accept a stake of less than the initially agreed 47% in the combined business. Still, the main hurdle remains an agreement on management changes, the people said.
The boards of both companies are scheduled to meet tonight to approve or reject the compromise, they said. There is pressure to reach an accord before investors of Ireland’s CRH Plc, which agreed to buy €6.5bn ($6.9bn) in assets that Holcim and Lafarge need to sell for regulatory approval, meet tomorrow to approve the purchase, people familiar with the matter have said.
Lafarge rose as much as 7.5% in Paris, while Holcim gained as much as 4% in Zurich and CRH added as much as 4% in Dublin.
The dispute over leadership by the 58-year-old Frenchman Lafont shows how a clash of personalities can become the biggest liability in mergers. The gum-chewing, cigar smoking Lafont and the soft-spoken Holcim CEO Bernard Fontana, who was due to remain in his post until the merger completion, have disagreed on key issues from the start, a person familiar with the matter said earlier this week.
Holcim and Lafarge have predicted the merger will lead to cost savings of €1.4bn annually, giving them an advantage over rivals as a global recession eroded demand for building materials and forced some kilns to run at a loss.