LH merger: Galchev demands improved terms

Russian billionaire, Filaret Galchev, who holds 10.8 per cent of Holcim through Eurocement holding, is demanding a renegotiation of the deal by Holcim and Lafarge to create the world’s largest cement company.

The revised terms of the merger gave a more attractive share-swap ratio for Holcim shareholders, whereby Lafarge shareholders would receive nine Holcim shares for every 10 Lafarge ones, rather than the one-for-one ratio previously proposed.

However, Galchev, Holcim’s second-largest shareholder, has rejected the revised terms as “not satisfactory and half-baked”. A source at his Eurocement holding firm said this week he wants to reopen the question of the exchange ratio, according to a report by Reuters.

Bruno Lafont, Lafarge CEO, ruled out any further change to the deal terms: "The financial parities are not going to change, nor will the governance," Lafont said.

Holcim Chairman Wolfgang Reitzle has also opposed revising the financial terms again, but said this week he was open to Eurocement having a seat on the merged company's board.

Gerard Lamarche, joint managing director of Groupe Bruxelles Lambert (GBL), Lafarge’s largest shareholder, also backed the idea of a Eurocement board seat, without further concessions: "I think there is nothing else to discuss. Eurocement is a shareholder like all the other ones," he told the Financial Times.

Holcim needs to secure support from two thirds of its shareholders to approve a capital increase to fund the deal at a meeting on 8 May.

People familiar with the situation said Holcim appeared ready to take the calculated risk of going ahead with the vote without Galchev's support, on the assumption that he will fear jeopardising the value of his Holcim holding, which could fall if the deal fails.

Bernstein analyst Phil Roseberg said the vote remains open and a "no" vote from Galchev's Eurocement would block the deal.

Holcim said Friday it was confident shareholders will approve the merger.