Holcim Announces Spin-off of North American Operations in $30 Billion NY Flotation as New CEO Takes Helm

ZURICH - In a significant move, Swiss building materials giant Holcim has revealed its plans to spin off its North American operations through a New York flotation. The company expects this strategic move to value its North American business at approximately $30 billion. Alongside this announcement, Holcim has also named Miljan Gutovic as its new Chief Executive Officer, who will replace Jan Jenisch starting from May 1.

This decision marks the most significant shake-up at Holcim since its acquisition of French rival Lafarge in 2015. The divestment is expected to be completed in the first half of 2025. Holcim will not retain any stake in the newly formed company, which will be listed on the New York Stock Exchange.

Jenisch stated that the goal of the spin-off is to propel the North American division's annual sales from the existing $11 billion to over $20 billion by 2030. Moreover, the company aims to generate an operating profit of more than $5 billion within the same timeframe. The remaining parts of Holcim's global business, comprising operations in Europe, Latin America, Africa, and Asia, will continue to be listed on the Swiss blue chip SMI index. These regions will primarily focus on building solutions, such as roofing products.

Jenisch, who has been at the helm of Holcim since 2017, will retain his position as chairman and will lead the planned listing in the U.S. The decision to list the North American business in New York was influenced by higher earnings multiples observed in the U.S. building materials market compared to Europe. This move is anticipated to enhance the valuation of the new company.

Industry analysts have responded positively to the news, considering it one of the most significant listings in the construction industry in recent years. The listing is expected to bring Holcim's valuation in line with its U.S. peers, as U.S. building material companies generally maintain higher valuations. Companies such as Carlisle, RPM, and James Hardy typically achieve a multiple of 10 to 15 times operating profit, while Holcim North America has only been trading at 7 times operating profit.

The decision to pursue the spin-off is not a recent development but has been planned for an extended period. Holcim perceived its North American operations as undervalued compared to competitors such as Carlisle, RPM, and James Hardy. The move reflects Holcim's recognition of the lucrative construction market in the United States, with its vast infrastructure and construction boom.

Holcim currently holds the position of North America's largest cement maker, employing 16,000 people across 850 sites. The company faces competition from various industry players, including Carlisle and RPM in the building products and solutions sector, and Eagle Materials and Summit Materials in the cement industry.

During the first nine months of 2023, Holcim's North American business contributed a quarter of the company's overall sales and emerged as the most profitable region. Its sales have demonstrated consistent growth, averaging over 20% in recent years. Meanwhile, the remaining Holcim business is projected to have sales of around 17 billion Swiss francs ($19.69 billion) and employ 48,000 individuals.

Holcim's decision to spin off its highly successful North American operations reflects the company's ambition to unlock further growth potential in the region by capitalizing on the thriving construction market. With the new CEO and a strategic listing on the New York Stock Exchange, Holcim aims to consolidate its position as a global leader in the building materials industry.

Title: Holcim to Spin-off North American Business in $30 Billion NY Flotation under New CEO Leadership