Holcim jumps on $30bn plan to spin off North American unit
Holcim Ltd shares jumped after the Swiss cement maker said it will spin off its North American unit into a separate US-listed entity, a move that could unlock a higher valuation for the business.
The US arm had about $11 billion in sales last year — about one-third of Holcim’s total — and could be valued at more than $30 billion, the company said. Holcim shares climbed as much as 14% in early trading, the most since March 2020, and were up 4% as of 12pm Zurich time, valuing the entire company at almost CHF39 billion ($45 billion).
US listings have become increasingly appealing to European companies as a wider investor base and bigger pool of capital offer the prospect of higher valuations. Holcim’s move for its US division follows the decision of fellow materials giant CRH Plc to shift from London to New York last year.
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Reacting to the news, Citigroup Inc. analyst Ephrem Ravi noted that US-listed building-product companies trade at a significant premium to European-listed peers. Zuercher Kantonalbank analyst Martin Huesler calculated the US business’s fair value at around $35 billion to $40 billion.
“It is a big advantage to have a customized capital structure for this business and to be in the US dollar,” Holcim Chief Executive Officer Jan Jenisch said in an interview on Monday with Bloomberg Television.
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Jenisch is stepping down from his role as CEO, and will be replaced by Miljan Gutovic, currently the head of the European business. Jenisch will remain chairman and lead the planned US listing of the North American business. He said the company would consider buybacks to help smooth the transaction.
The US market is growing at a rapid pace as builders race to relieve a chronic lack of single-family homes and meet regulatory pressures for more energy-efficient buildings. The unit expanded through an acquisition spree that broadened its offering of building materials.
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Holcim says the North American business is the No. 1 player in cement and No. 3 in roofing, and it aims to roughly double sales to about $20 billion by 2030.
Jenisch said the US housing market has great momentum, while downplaying risks of policy changes in case of a reelection of Donald Trump in the US presidential election in November. He said “economic policy is very consistent” and infrastructure and housing will remain a priority.
“We have a rockstar business in the US,” Jenisch said. “We will have a very strong capital structure for both companies so plenty of headroom to support the US listing.”
–With assistance from Kriti Gupta.
©2024 Bloomberg L.P.
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