Holcim Aims for $30 Billion Valuation with North American Business Listing

Holcim Aims for $30 Billion Valuation with North American Business Listing

Swiss construction behemoth Holcim (HOLN.S) is set to fully divest its North American segment through a public listing in New York, potentially reaching a $30 billion valuation. Alongside this strategic move, the company also heralded the appointment of a new CEO.

Holcim’s Strategic Revamp

Leadership and Operational Shift

Holcim, a global leader in cement production, announced that Miljan Gutovic, the current European division head, is poised to take the helm as CEO from May 1, succeeding Jan Jenisch. This leadership change coincides with the most significant transformation at Holcim since its acquisition of Lafarge in 2015. The divestment, aimed for completion in early 2025, marks a pivotal shift, with Holcim planning to offload 100% of its North American operations.

Market Dynamics and Financial Aspirations

Jenisch unveiled the strategy to separate the North American business fully, listing it on the New York Stock Exchange. This decision comes with ambitious targets for the U.S. division, which aims to nearly double its annual sales to over $20 billion and achieve an operating profit surpassing $5 billion by 2030. Meanwhile, Holcim intends to retain its presence on the Swiss blue-chip SMI index, focusing on diversified building solutions, particularly roofing products.

Holcim’s Strategic Footprint

Leadership Continuity and Regional Focus

Despite stepping down as CEO, Jenisch will continue to play a pivotal role as chairman, overseeing the U.S. listing. This move leverages the higher valuation multiples for building materials companies in the U.S. compared to Europe. Jenisch highlighted the strategic significance of the U.S. market, known for its robust construction and infrastructure sector.

Competitive Landscape and Business Performance

In North America, Holcim stands as the leading cement manufacturer, employing 16,000 individuals across 850 locations. The company competes with notable names like Carlisle and RPM in building products and solutions, as well as Eagle Materials and Summit Materials in the cement sector.

The U.S. operations, representing a quarter of Holcim’s sales in the first nine months of 2023, have showcased remarkable profitability, with sales surging by over 20% in recent years. The rest of Holcim’s operations, boasting sales of approximately 17 billion Swiss francs, employ a workforce of 48,000.

As Holcim prepares for this monumental shift, the company aims to capitalize on the lucrative U.S. market, while also streamlining its global operations. The move not only marks a significant valuation leap but also sets a new trajectory for the company under fresh leadership.

Source: https://www.reuters.com/markets/commodities/switzerlands-holcim-spin-off-north-american-business-picks-new-ceo-2024-01-28/