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Amid U.S. construction boom, world’s largest cement maker will spin off North American business, seek $30B valuation: ‘Two independent champions’

Holcim Ltd., the giant in cement production worldwide, just dropped a bombshell: they’re planning to split off their booming North American business. And the big news? They’re gearing up for a splashy listing in the US next year, and the buzz is it could be worth a whopping $30 billion or more.

Adding to the shake-up, Miljan Gutovic, the current head honcho for Europe at Holcim, is stepping into the CEO shoes, taking over from Jan Jenisch, who will continue to steer the ship as the Chairman. The switcheroo is set to go down on May 1.

Jenisch spilled the beans in a post-announcement conference call, mentioning that a valuation north of $30 billion seems just about right for the North American arm. Holcim’s stocks had a stellar run last year, shooting up by 38% and hitting their highest point since 2015 in December. As of Friday, they closed at 64.20 francs.

The big move to split things up is Holcim’s way of undoing a spree of global acquisitions, all triggered by the different rulebooks in North America and Europe. Last year, North America raked in a cool $11 billion in revenue for Holcim, making up over a third of the company’s overall earnings.

Why the split? The US construction scene is on fire, with builders scrambling to tackle the shortage of single-family homes and meet the push for more eco-friendly buildings. Holcim’s North American unit went on an acquisition spree, bulking up its range of building materials.

Now, here’s the plan: Holcim wants to list the whole shebang on the New York Stock Exchange, and they figure it’ll take about 15 months to get everything sorted. As things stand, every Holcim shareholder is set to score shares in both the European and US operations once the dust settles.

Jenisch is optimistic, calling the separation a “value-creating move” that will birth two independent powerhouses. Management decisions, including the US CEO, are slated to roll out by the first half of 2025. And as for Jenisch’s future role in the US business? Well, he’s keeping his cards close, saying, “I will make a decision later on which position is there for me.”

Under Jenisch’s watch, Holcim made strategic moves like snagging Duro-Last Inc., a US commercial roofing systems maker, and grabbing Bridgestone Corp.’s Firestone Building Products unit. The new CEO in town, Gutovic, has been leading the charge on Holcim’s mission to cut down on carbon emissions.

Jenisch, since taking the reins in 2017, has been steering Holcim away from the traditional cement game, especially as the industry faces increasing pressure to be more eco-friendly. The company also bid adieu to cement operations in some emerging markets, like selling off its Indian branch to billionaire Gautam Adani for a cool $6.4 billion.

In the midst of all this, Gutovic spilled the beans recently, hinting that Holcim has its eyes on around 20 smaller acquisitions in 2024 and isn’t ruling out another game-changing deal. We’ll get the full scoop when Holcim drops its earnings report on February 28. Exciting times ahead!

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