Holcim eyes $30 billion valuation with North American business listing, picks new CEO

Miljan Gudovic, currently president of Europe at Holcim, will replace Jan Jaenisch as CEO effective May 1, the company, one of the world's largest cement makers, said.

The divestment will be completed in the first half of 2025, in the biggest shake-up at Holcim since the Swiss company took over French rival Lafarge in 2015.

“Our North American business is a real rock star. Over the last four years we've doubled the company through strong organic growth, acquisitions. And we have leading margins, with an EBITDA margin already above 27%,” Jenisch told CNBC on Monday. .

“Now I'm excited to start the next phase of performance for the $20 billion sales business. We want to unbundle it to get all the synergies from our distribution chain to focus more on our North American customers.”

Jenisch told reporters that the spin-off would value the new company at about $30 billion, with Holcim retaining no stake.

“We're going to do a full capital markets arm of our North American business, so we'll list 100% of the business on the New York Stock Exchange,” said Jenish, who will seek shareholder support for the float.

Holcim's operating model is already focused on North America, with five R&D centers in the region, Jenisch told CNBC. The company sees the spin-off as having “minimal implementation costs,” he added.

The U.S. business aims to grow annual sales to more than $20 billion from $11 billion currently, and generate an operating profit of more than $5 billion by 2030, the company said.

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Holcim's other global business in Europe, Latin America, Africa and Asia is listed on the Swiss blue-chip SMI index and focuses on developing solutions such as roofing products.

Jaenisch, who has led Holcim since 2017, will remain chairman and lead a planned listing in the US, where the building materials company will improve its valuation on higher earnings than in Europe.

Analysts were bullish on the listing, one of the biggest in the construction industry in years.

“I understand that because the transatlantic synergies are limited,” said Zuercher Kantonalbank analyst Martin Hüsler.

“The valuations of U.S. building materials peers are higher than Holcim, so I view that as a positive.”

The transaction was long planned, according to a person familiar with the matter, because Holcim thought its North American business was undervalued compared to peers such as Carlisle, RPM and James Hardie.

Holcim North America traded at 7 times operating profit, well below peers' multiples of 10 to 15 times.

Genisch, who describes the US as one of the world's most attractive construction markets, said the move would help the new company take advantage of the region's infrastructure and construction growth.

Holcim is the largest cement producer in North America, employing 16,000 people at 850 sites. The business competes regionally with companies such as Carlisle, RPM in products and solutions, and Eagle Materials and Summit Materials in the cement industry.

The North American business accounted for a quarter of Holcim's sales in the first nine months of 2023, and sales have grown by an average of more than 20% in recent years, making it the company's most profitable region. The remaining Holcim business will have sales of about 17 billion Swiss francs ($19.69 billion) and employ 48,000 people.

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The American operations were “too successful to be run as a subsidiary,” Jaenisch said.

CNBC's Jenny Reid contributed to this report.

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