Construction

Holcim scores clear victory in Lafarge deal

20 Mar 2015

The Swiss cement maker has reset deal terms with its French partner. That’s fair – the new exchange ratio keeps the tie-up a merger of equals. But Holcim has also managed to veto Lafarge’s Bruno Lafont as CEO. Lafarge’s concession suggests its shareholders are anxious for a deal.

Lafarge-Holcim merger can be rescued as takeover

16 Mar 2015

The European cement makers disagree about the financial terms and governance of their planned tie-up. A “merger of equals” has foundered yet again. To keep the deal’s benefits, the way forward would be for Lafarge to agree to be bought for a suitable premium.

Holcim can push for more in Lafarge tie-up

13 Mar 2015

The Swiss cement group is outperforming its French rival, creating cracks in their $44 bln union. A special dividend or higher exchange ratio could fix matters. That is more likely to happen than deal failure, given that both sides would suffer if it fell apart.

Armstrong flooring spin suggests breakup ceiling

23 Feb 2015

Investors typically roll out the welcome mat for corporate splits. Yet the $3 bln building materials group’s shares were nearly as flat as hardwood boards after it revealed plans to house its two units under separate roofs. Financial engineering can’t cover up every crack.

CRH’s $7.4 bln buy reveals M&A tolerance

2 Feb 2015

It’s a big bet. The Irish building group will increase leverage – even with a big equity issue – to buy surplus assets from Lafarge worth a third of its market cap. CRH got sucked into an auction too. Yet investors cheered. It’s how things work in a low-return, low-growth world.

U.S. housing demand is building

26 Dec 2014

The post-crisis rebound boosted home prices 25 pct even as sales and construction lagged. Increasing household formation, job creation and easing credit look set to give the market another leg up, despite rising interest rates and the headwind of sliding affordability.

Saint-Gobain’s deal cunning could backfire

8 Dec 2014

The French materials group is seizing control of Swiss peer Sika by paying $2.8 bln for a minority family stake which has majority voting rights. Sika’s board is laudably indignant. And Saint-Gobain’s tactics have a hidden cost of upsetting other investors and the target’s staff.

Spanish heiress’ pain is builder FCC’s gain

20 Oct 2014

The Spanish group plans a 1 billion euro capital hike to pay down debt. That will massively dilute Esther Koplowitz’s majority stake after she refinances her own 1 billion euro debt. FCC can attract new investors, provided the price is right and markets agree. 

Carillion’s new Balfour offer still falls short

19 Aug 2014

The plan to merge the UK construction groups always looked fraught. The potential for cost savings is high, but Carillion has left questions about execution risk unanswered. Its proposal is also less generous than its 36 pct premium claim implies. Balfour can remain stony-faced.

Wary India investors can wet their toes with REITs

11 Aug 2014

Newly approved real estate investment trusts may hasten the return of the nation’s stagflation-scarred retail investors. Property can be a better alternative to gold and REITS may revive hunger for equities. Builders could use them to mend balance sheets, and fund new assets.

Bilfinger’s best option could be a breakup

6 Aug 2014

Two profit warnings in five weeks have wiped a third off the German industrial services group’s share price, costing the CEO his job. Unless it can be turned around, Bilfinger’s unwieldy structure and muted growth prospects make a breakup as plausible as a full sale.

UK construction tie-up needs more than cost cuts

25 Jul 2014

The mooted amalgamation of Britain’s Carillion and Balfour Beatty might qualify as a merger of equals, but only because Balfour has fallen on hard times. Synergy promises will make the numbers work. The danger is that operational misfortunes will drag down the larger group. 

China default shows market forces exist for some

22 Jul 2014

A second bond looks set to fail, and funding costs for riskier issuers have been rising. Yet big and state-linked borrowers still enjoy low rates, because investors believe failure is only for the unlucky few. The real shift will come when China challenges that tenet.

Builder’s shaky foundations dent UAE’s credibility

27 Jun 2014

Shares in Arabtec have lost more than half their value in six weeks. The abrupt resignation of its CEO, uncertainty over sovereign support and poor communication are to blame. It’s a warning to investors attracted to the country by its new emerging market status.

Orange talk shows Bouygues’ pull on French state

16 May 2014

The former monopoly could buy the telecoms arm of the French construction company. Bouygues is also crucial to Alstom’s fate. Martin Bouygues failed to bag mobile operator SFR. But he’s been remarkably adept at using that defeat to get the French government onside.

America may be able to build its way to prosperity

9 May 2014

That’s the gist of two new reports on infrastructure spending. Brookings argues investing in roads and bridges would secure 3.8 mln long-term jobs and trim inequality. Crucially, S&P reckons such projects would pay for themselves. If so, that’s a strong case against inertia.

Lafarge and Holcim should get selling

10 Apr 2014

Investors worry the cement groups’ $50 bln merger will destroy value, with rushed disposals to win antitrust clearance. But if the Franco-Swiss duo has found the right assets to sell, and the synergies stack up, it’s worth swallowing some losses to get on with the integration.

Lafarge-Holcim share jump has gone far enough

7 Apr 2014

The planned $50 bln merger of the French and Swiss cement groups has added a combined $5 billion to their market capitalisations. Credible synergies could be worth much more. But uncertainty over completion and the risk of value-destructive forced disposals justify scepticism.

Cement megadeal heralds industrial merger comeback

6 Apr 2014

Holcim and Lafarge are set to unveil a $55 bln cement behemoth. This “merger of equals” rests on skilful construction to assuage French politics. The ambition of combining two sector leaders amid big antitrust obstacles shows that CEOs are ready to take M&A risk to boost returns.

Bouygues tries last-minute less-is-more SFR bid

4 Apr 2014

The French construction group has come up with its fourth offer for Vivendi’s mobile arm a few hours before a decisive board meeting of the media conglomerate. It proposes more cash for a smaller overall valuation. That places high hopes on Vivendi’s preference for cash.