The boards of Lafarge and Holcim met separately on Tuesday in an attempt to salvage their merger to create the world’s biggest cement firm, sources said.
Holcim called a halt to the deal on Monday, pressing for the price and management structure to be changed from the original “marriage of equals”, which named Lafarge boss Bruno Lafont as chief executive of a combined company.
A source said Lafarge would not accept renegotiations on governance of the new company.
The original merger agreement also designated a board made up of seven members from each company.
On Sunday, Holcim said it wanted to open talks on the exchange ratio and on “governance issues” because its board no longer accepted the original merger terms.
Lafarge said on Monday it would consider revising the share exchange ratio, but nothing else.
A Holcim shareholder who opposes the deal said the appointment of Lafarge’s Lafont has head of the new company has become a bone of contention, with some questioning his ability to deliver promised cost savings of €1.4 billion a year.
“Both will lose if the deal fails, but recent share price moves show that Lafarge has more to lose than Holcim,” he said.
A Paris-based analyst said the combined group would have a return on investment of about 10% while separately they now achieve 5 or 6%.
Both groups have plans to improve profitability, but if they go ahead separately these plans would only get them about an 8% ROI.
Ireland-based building materials group CRH could become collateral damage if the Holcim-Lafarge deal unravels since it was to buy a chunk of European assets from them to appease competition authorities.
If Lafarge and Holcim cannot reach agreement, the asset sale to CRH will be cancelled and the Irish company will get a break-up fee of €158 million.
