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Holcim Targets $30B Value, Appoints CEO, Plans US Listing

Discover how Holcim targets $30B value through its strategic decision to list its North American business in New York, alongside appointing a new CEO and planning a major market shift.

Henry Hamer
Jan 30, 2024800 Shares34804 Views
Switzerland's building materials behemoth, Holcim targets $30B value, appoints CEO, and plans US listing. Holcim is embarking on a transformative journey, targeting a $30 billion valuation through the listing of its North American business in New York. This major strategic move is coupled with a significant leadership change, as Miljan Gutovic is set to take the helm as CEO from May 1. This announcement has caused Holcim's shares to surge, reflecting the market's optimistic reception of these developments.

A Strategic Overhaul And Leadership Change

In what marks the most significant overhaul since its merger with French rival Lafarge in 2015, Holcim is set to fully spin off its North American operations.
"Our North American business is a real rock star. We doubled the company just in the last four years by strong organic growth, by acquisitions. And we have leading margins, the EBITDA margin is already above 27%," Jan Jenisch, the outgoing CEO, told CNBC, highlighting the robust performance of this division.
Jenisch, who has been instrumental in steering Holcim since 2017, will continue to play a crucial role as chairman, guiding the company through the U.S. listing process. The decision to list in the U.S. is strategic, given the higher earnings multiples that building materials companies enjoy in this market compared to Europe. This move is anticipated to significantly enhance the valuation of Holcim's North American operations.
Miljan Gutovic, currently the head of Europe at Holcim, is poised to succeed Jenisch. This leadership transition coincides with the company's ambitious plans to bolster its presence in one of the world’s most lucrative construction markets. Gutovic's appointment signals a new era for Holcim, as the company seeks to capitalize on the booming infrastructure and construction sector in North America.
Holcim's North American business, which represents a quarter of the company's sales, has been a key driver of growth. With a current annual revenue of around $11 billion, the company aims to increase this figure to over $20 billion and achieve an operating profit of more than $5 billion by 2030. This aggressive growth plan underlines the strategic importance of the North American market for Holcim.
The rest of Holcim's global operations, spanning Europe, Latin America, Africa, and Asia, will continue to be listed on the Swiss blue-chip SMI index. These segments will focus on diversified building solutions, including roofing products, capitalizing on Holcim's extensive global footprint.
Industry analysts have lauded this strategic move. Martin Huesler, an analyst at Zuercher Kantonalbank, remarked, "As transatlantic synergies are limited, it makes sense to me. The valuations of U.S. building material peers are higher than Holcim, so I consider it as positive."
This sentiment reflects the broader market consensus on the potential benefits of the listing and spin-off.
This transition comes after Holcim's French subsidiary Lafarge pleaded guilty to charges related to operations in Syria, which resulted in a substantial settlement with U.S. authorities. Despite this backdrop, Holcim's focus on the North American market remains unwavering, as Jenisch described the U.S. as "one of the world’s most attractive construction markets."
The spin-off and listing, expected to be completed in the first half of next year, symbolize a new chapter for Holcim. With the North American unit targeting over $20 billion in net sales by 2030, and Holcim retaining its listing on the Swiss SIX stock exchange, the company is poised for a significant transformation in its global positioning and market value.

Conclusion

Holcim's strategic decision to spin off its North American operations, coupled with a leadership transition, marks a pivotal moment in the company's history. This move is expected to unlock significant value for the company and its shareholders, reinforcing Holcim's position as a global leader in the building materials industry.
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