Cement rival CRH assumes Lafarge, Holcim deal will work

(adds more quotes on breakup fee, background, CRH (NYSE: CRH - news) intentions)

By Padraic Halpin

DUBLIN, March 19 (Reuters) - Irish cement firm CRH is assuming the merger of rivals Lafarge (Paris: FR0000120537 - news) and Holcim will still happen, its chief said after CRH shareholders approved an asset purchase that depends on the deal.

CRH has agreed to buy a number of mostly European assets from Lafarge and Holcim (Other OTC: HCMLF - news) for 6.5 billion euros ($6.9 billion) so the French and Swiss firms can get antitrust clearance for their plan to create the cement industry's biggest company.

Unveiled as a merger of equals in April last year, the plan has looked shaky this year with Holcim shareholders grumbling about the diverging performances of the two firms and the Swiss firm has now called for the deal terms to be revised.

"At this moment in time, we're working forward on the basis that the deal will close, the merger will happen," CRH Chief Executive Albert Manifold told reporters, adding that he had spoken to both companies earlier on Thursday.

He said the CRH vote was a procedural step that had to be done, regardless of the uncertainty at Lafarge and Holcim, as a failure to approve the asset purchase would have left CRH exposed to a potential 158 million euro break-up fee.

"Likewise, if other parties don't conclude this deal for whatever reason, we would then be in receipt of a break fee," Manifold told reporters at the shareholder meeting.

Holcim said on Sunday it wants to change the original one-for-one share exchange ratio and has problems with the proposed management structure of seven board members each and Lafarge boss Bruno Lafont becoming CEO of the new company.

The two firms are now discussing a new leadership which would give Lafont a lesser role, sources familiar with the matter said on Wednesday.

A Holcim board meeting took place on Wednesday night and Lafarge's board was due to meet on Thursday in a bid to salvage the deal to create a company with annual sales of more than 30 billion euros.

"I'm not going to speculate on whether it is or isn't going to happen. There are discussions going on in Paris or Zurich today to decide what they want to do over the next couple of days," Manifold said, adding that CRH was interested in buying the assets even if the merger falls through.

CASH PILE

The Irish cement maker's extraordinary general meeting on Thursday approved the acquisition of assets, which include operations in Britain, Canada and Brazil, with financing from cash reserves, debt and a share issue. CRH is looking to bulk up and diversify its building materials business geographically with the Lafarge-Holcim acquisitions.

The assets would transform CRH into the world's third-largest building materials supplier, the biggest in central and eastern Europe and double its presence in emerging markets.

CRH makes about half its sales in the United States and wants more exposure to new markets such as the Philippines and parts of Europe it believes are beginning to recover.

Manifold said CRH had its eye on other acquisitions, should the purchase of Lafarge and Holcim assets fall through.

"This deal is an important part of the strategy of CRH, but it is not the strategy of CRH," he said after the vote.

"Our pipeline of acquisitions is quite full at this time, probably fuller than it has been at any time over the last five or six years, this is part of that process."

CRH has already raised 1.6 billion euros through an equity placing and held off on other deals to build up 2 billion euros of cash to fund the deal. It will also issue new debt. (Additional reporting by Freya Berry; writing by Andrew Callus; editing by Mark John and David Clarke)