Swiss cement producer LafargeHolcim has agreed to buy roofing and building envelope developer Firestone Building Products from Japan's Bridgestone Corporation in a deal which is set to be its largest purchase in a decade.
LafargeHolcim has previously been accused of funding terrorism and being complicit in war crimes in Syria. Photo: United Way of the Lower Mainland / Creative Commons Licence: CC BY-NC
The transaction has been valued at $3.4 billion (€2.7 billion) and marks the biggest transaction undertaken by new CEO Jan Jenisch, who has been at the head of the company since 2017, replacing Eric Olsen, who was previously embroiled in the scandal relating to the company's involvement in Syria.
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The deal will be financed using cash and debt while maintaining net debt below 2x. Synergies of $110 million (€89.7 million) per year are expected on a run-rate basis within two years of closing, which is expected in the second quarter.
The deal is expected to be earnings accretive from the first year, with mid-single-digit sales growth.
The deal will help LafargeHolcim meet with increased demand for roofing services, particularly those which generate solar energy or cool homes in areas such as San Fransisco.
CEO Jenisch has said the primary driver for this deal was company growth.
He added: “I am excited to be entering the highly attractive roofing business. With Firestone Building Products we are strengthening our biggest market, the US, while also building a global growth and innovation platform for the company.
"Today’s milestone is a strategic leap on our journey to become the global leader in innovative and sustainable building solutions, to build a world that works for people and the planet.
"I have great respect for the high-calibre leadership and expertise of the Firestone Building Products’ team and look forward to welcoming them into the LafargeHolcim family.”
The Nashville-based company ran with an operating profit of $238 million (€194 million) in 2020.
Bridgestone, the deal's recipients, have said the acquisition should cement LafargeHolcim's position within their primary market, the US, with the potential to reach $6 billion (€4.89 billion) in net sales.
Paolo Ferrari, Bridgestone Americas President, CEO & COO said: “This transaction will create new growth opportunities for Firestone Building Products and allow Bridgestone to focus its resources to further invest in the company’s tire business and rapidly growing mobility solutions business. Like Bridgestone, LafargeHolcim is a global company with a strong financial position and thriving culture.
"We know they will take great care of our Firestone Building Products employees and customers, and ensure the business enjoys growth and success for many years to come.”
Taylor Cole, Firestone Building Products President: “Today is a big moment for the Firestone Building Products team as we look forward to becoming part of the global leader in building materials and solutions.
"Together, we are in a prime position to accelerate our growth by combining Firestone Building Products’ advanced technologies and know-how with LafargeHolcim’s global scale and reach.”
Back in 2019, a French court rejected a charge against Lafarge saying they had "been complicit in committing crimes against humanity" over its involvement in Syria
Read more: Lafarge cleared of Syrian crimes against humanity but terror funding stands
Alongside the company, three former executives faced charges, including ex-CEO Bruno Lafont.
Two years prior, the cement giant had admitted to funding armed groups in Syria following a 2016 complaint about it funding terrorism and complicity in war crimes.
Its French parent company was deemed equally responsible in the eyes of the court, owing to it holding a 98% share and "was most of the time the source of the decisions being made."
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