Amid U.S. construction boom, world’s largest cement maker will spin off North American business, seek $30B valuation
Holcim Ltd., the world’s largest cement maker, announced plans on Sunday to separate its fast-growing North American business in preparation for a listing in the United States next year, aiming for a valuation of over $30 billion. The Swiss-based company also named Miljan Gutovic, its European head, as the new CEO, effective May 1.
According to Jan Jenisch, who will remain chairman of Holcim, the valuation of over $30 billion is in the right ballpark for the North American unit. Holcim shares surged 38% last year and reached the highest level since 2015 in December, closing at 64.20 francs on Friday.
The spinoff is seen as a value-creating move for Holcim’s shareholders. Jan Jenisch expressed confidence in the decision, stating, We now make two independent champions.
The separation of Holcim’s North American business is a result of diverging regulatory regimes between North America and Europe, triggering a period of acquisitions for the company globally. In 2022, the North American region accounted for more than a third of Holcim’s revenue, generating $11 billion.
The robust growth of the U.S. construction market, driven by the urgent need for single-family homes and the demand for energy-efficient buildings, has propelled Holcim’s North American unit. The acquisition spree expanded its offering of building materials.
The listing of the entire North American business on the New York Stock Exchange is expected to take around 15 months. As part of the planned transaction, every Holcim shareholder would receive shares in both the European operations and the U.S. operations.
Management appointments, including the position of the U.S. CEO, will be finalized in the first half of 2025. Jan Jenisch, when asked about a potential future role in the U.S. business, stated that he would make a decision later.
Under Jan Jenisch’s leadership, Holcim has shifted its focus away from traditional cement in response to increasing pressure on builders to reduce their carbon footprint. The company has also divested from cement activities in some emerging markets, including the sale of its Indian operations for $6.4 billion to billionaire Gautam Adani.
Miljan Gutovic, appointed as the CEO of Holcim, has been a member of the company’s executive committee since 2018. He has played a significant role in leading Holcim’s efforts to reduce carbon emissions. Prior to joining Holcim, Gutovic held various management positions at Swiss specialty chemical company Sika AG.
Holcim intends to continue its acquisition strategy, with around 20 bolt-on acquisitions planned for 2024. Another transformational deal is not ruled out. The company’s earnings for the current period are scheduled to be reported on February 28.
In summary, Holcim’s decision to spin off its North American business and pursue a listing in the U.S. reflects the company’s value-creating strategy for shareholders. With a valuation of over $30 billion, the move is aimed at capitalizing on the rapid growth of the U.S. construction market. Miljan Gutovic’s appointment as CEO, effective May 1, signifies a new chapter for Holcim as it continues to navigate the evolving global landscape of building materials.
