Holcim Ltd., the world’s largest cement maker, announced on Sunday its intention to separate its fast-growing North American business, setting the stage for a listing next year in the United States with a projected value exceeding $30 billion.
The Swiss-based producer of building materials also revealed the appointment of Miljan Gutovic, currently head of its European operations, as the incoming chief executive officer. Gutovic will succeed Jan Jenisch, who will transition to the role of chairman. The executive transition is slated to take effect on May 1.
During a conference call following the announcement, Jenisch stated that a valuation surpassing $30 billion is within the expected range for the North American unit. Holcim shares experienced a notable surge of 38% over the past year, reaching their highest level since 2015 in December, with Friday’s closing price at 64.20 Swiss francs.
Jenisch emphasized the spinoff as a potentially value-enhancing move for shareholders, asserting, “We now make two independent champions.”
The decision to separate the North American business marks a strategic shift for Holcim, which has previously embarked on a series of global acquisitions. This move comes amidst diverging regulatory landscapes between North America and Europe. According to Jenisch, the North American region contributed $11 billion to the company’s revenue last year, accounting for over a third of its total revenue in 2022.
The US market has been experiencing rapid growth, driven by efforts to address a chronic shortage of single-family homes and meet regulatory demands for energy-efficient construction. Holcim’s North American unit has expanded through a series of acquisitions aimed at diversifying its portfolio of building materials.
The process of listing 100% of the North American business on the New York Stock Exchange is anticipated to take approximately 15 months, Jenisch noted. As part of the current plan, every Holcim shareholder would receive shares in both the European and US operations following the transaction.
Management appointments for the North American business, including the CEO position, are expected to be finalized by the first half of 2025, Jenisch added.
Gutovic, who has been a member of Holcim’s executive committee since 2018, has played a pivotal role in the company’s efforts to reduce carbon emissions. He previously held various management positions at Swiss specialty chemical company Sika AG.
Under Jenisch’s leadership, Holcim has shifted its focus away from traditional cement production to address increasing pressure to reduce carbon emissions. The company has also divested cement activities in certain emerging markets, including the sale of its Indian operations to billionaire Gautam Adani for $6.4 billion.
Looking ahead, Gutovic revealed that Holcim is considering approximately 20 bolt-on acquisitions in 2024 and does not rule out the possibility of another transformative deal. Holcim is scheduled to report its earnings on February 28.
