World largest cement group decides to sell business and leave Brazil

RIO DE JANEIRO, BRAZIL – Zurich-based world leader in the production of cement and other building materials, LafargeHolcim, is starting the process of leaving Brazil with the sale of its local operations, which total 10 industrial units, as well as distribution centers, mixing terminals and some mining units.

According to industry sources, the Franco-Swiss group has hired Itaú BBA bank and other financial advisors to help it find buyers for the assets it operates in the country and abroad.

With 5 integrated plants and 5 cement grinding units, LafargeHolcim can produce around 10 million tons per year.

The divestment will be integral, maybe a lengthy process because it will have to pass the Administrative Council for Economic Defense (CADE) scrutiny due to potential market concentration. If it is an incoming group in the country, there will be no difficulty in getting approval. If it is a local player, the antitrust agency may impose a series of “remedies,” such as the sale of assets.

LafargeHolcim may also decide to sell assets in regional blocks – the company is present in the Southeast, Northeast, and Midwest. However, the preference is to get rid of all the operations it has in the country, sources said.

Exactly 7 years ago, the French Lafarge and the Swiss Holcim, two leading giants in the building materials sector, decided to merge their assets worldwide. The operation forced the 2 companies to sell a package of assets in several countries, including Brazil, to obtain the approval of the antitrust agencies, especially in the European Union.

With its decision – which has already been communicated to employees – LafargeHolcim becomes the second cement company to leave the country in less than a year.

At the end of 2020, the Irish group CRH sold its operations to Companhia Nacional de Cimento, controlled by the Italian Buzzi and the Brazilian group Brennand. The curious thing is that CRH had acquired, in 2015, the operations that Lafarge and Holcim had to sell in the merger process.

According to sources, the moment is good to get rid of assets in the country because the local market, after four negative years, began a process of recovery in consumption in 2019 – it grew 3.5% that year, 11% last year, and the expectation is positive for 2021 (an increase between 2% and 6% is estimated). In this scenario, the assessment is that local assets are more valued.

LafargeHolcim is present with industrial units in the states of Minas Gerais, São Paulo, Rio de Janeiro, Espírito Santo, Bahia, Paraíba and Goiás. The company operates in the market with the brands Mauá and Montes Claros (retail) and Holcim (large customers) and currently employs about 1,400 people.

Sought, the company reported through its advisory services that it would not comment on the matter. Itaú BBA did not comment.

The decision to sell was taken by the group’s headquarters, located in Zurich, Switzerland, as part of a strategy to focus on countries with strong currencies and where it can secure greater profitability from its operations, which is not foreseen for Brazil.

Source: Valor