Cement giants Holcim Ltd. and Lafarge SA cleared a major hurdle toward their planned $43 billion merger after antitrust authorities in Europe said the deal could go ahead, subject to significant asset sales across the region.
The deal, if approved by other global competition regulators, would reshape the global cement industry, spawning a construction-materials juggernaut. It had been expected to face significant hurdles from antitrust authorities, particularly in Europe, given the scale of the two companies’ operations in the region.
Margrethe Vestager, the EU’s top antitrust official, announced the decision on Twitter late Monday. “Acquisition of Lafarge by Holcim is subject to conditions. The merger can proceed,” Ms. Vestager tweeted, adding that it would be “good for growth.”
The EU’s approval is conditional on divestments by the two companies that Ms. Vestager described in a statement as “very substantial.”
Holcim will have to sell all of its businesses in the Czech Republic and Slovakia, two plants in Spain, and most of its activities in France relating to cement, ready-mixed concrete and aggregates, according to a statement from the European Commission, the bloc’s top antitrust regulator.
Lafarge will be required to sell all of its businesses in Germany and Romania, as well as U.K. businesses that are carried out through Lafarge Tarmac, a joint venture with Anglo American, with the exception of a single cement plant.
The companies won’t be allowed to close the deal until the commission has approved the buyers of the assets, the regulator said.
“With the remedies, we have ensured that the creation of an increased global footprint of the group will not come at the expense of competition in the EU,” Ms. Vestager said.
In twin statements, the two companies said they were “actively pursu[ing] negotiations for the sale of these assets with potential buyers, who will have to be pre-approved by the European Commission.” Lafarge said it still expected the merger to close in the first half of next year.
Holcim, Jona, Switzerland, and Lafarge, Paris, have been working with regulators around the world to satisfy anti-competition fears.
The two companies still are awaiting approvals from other parts of the world, including the U.S., Canada, Mexico, India for the deal to proceed, although authorities in some countries like Russia and South Africa already have given the deal their blessing. The companies had combined sales of $39.3 billion in 2013.
Analysts estimate Holcim and Lafarge could raise as much as 10.3 billion Swiss francs ($10.7 billion) from the sales of cement factories and other facilities.
Unveiling their merger plans in April, the companies had pledged to sell assets that generate about EUR5 billion, or $6.8 billion, in annual revenue to address competition concerns. Holcim finance chief Thomas Aebischer has said some 60 parties, a mixture of buyout firms and building-materials companies, had submitted bids for all or some of the assets.
Holcim has said it expects to agree to deals with potential purchasers by the end of 2014 or early 2015 as it moves ahead with its timetable to complete the merger during the first half of next year.