At Lafarge, the “merger of equals” has demonstrated both the betrayal of French individual shareholders by the management and its absence of corresponding self-vision: the search of size at any price with the encouragement of large banks has produced the merger plan with Holcim, but the transaction is only based on modest volume synergies and on the sharing of markets instead of growth based on internally generated efficiency, quality and technological research.
This mega deal somehow covered-up the cost and the current risk of an unfortunate management decision by Bruno Lafont, the acquisition of Orascom Cement, announced in December 2007, was to be balanced the now happy over-exposure of Holcim in India … This Lafarge-Holcim merger turns now into a takeover without premium for the Lafarge shareholders …
This renegotiation of the terms of merger between Lafarge and Holcim and a 10% lower parity for the shareholders of the French group, while individual French holders will be pushed out of their PEA tax protected accounts, is a typical result of the unfairness of the market and of the perverse impact of protectionnist provisions.
Bruno Lafont, the CEO of Lafarge, as a talented international manager, had inherited from his predecessor Bertrand Collomb the reins of a great French company, a world leader in cement, but he finds himself trapped by the play of a protectionist governance. A double voting rights among other voting limitations and other statutory measures supported by the AFEP, had detached this management from the former religion of individual shareholders and made it, as usual, the devoted servant of its main shareholder, in since case since 2006 GBL with 21% of the company …
The new group’s seat will move to Switzerland, the management selection will be shared but the price of the merger was recently discussed by the Swiss party and the merger parity was finally reviewed 10% lower for the Lafarge shareholders…
One cannot, dear Bruno Lafont serve two masters, the community of all shareholders and the priorities of an influential shareholder, even as polite and frequentable as GBL can be!
PARIS, March 23, 2015
