Holcim spins off its North American division, listing it on the NYSE

Swiss construction materials giant Holcim Ltd. will separate its North American operations through a listing on the New York Stock Exchange (NYSE), an operation that could value the business at $30 billion, according to Reuters.

The announcement regarding the separation was made by the company on Sunday, along with the publication of the information according to which, from May 1, it will replace the executive director Jan Jenisch with Miljan Gutovic, who is currently the head of Holcim's operations in Europe.

Jan Jenisch declared, according to Reuters: "We will do a complete separation of our North American business, so we will list 100% of the division on the New York Stock Exchange." Jenisch is confident that he will get shareholder support for the transaction.

After the separation of the North American division, Holcim will not retain a share in it.

The US business aims to grow annual sales from about $11 billion today to more than $20 billion and generate an operating profit of more than $5 billion by 2030, according to the company.

The rest of Holcim's global businesses - from Europe, Latin America, Africa and Asia - will remain listed on the Swiss stock exchange, being part of the SMI blue chip index. These businesses will focus on construction solutions such as roofing products.

Jenisch, who has led Holcim since 2017, will remain chairman and oversee the planned listing in the US, where building materials companies are more profitable than in Europe.

Analysts are positive regarding the listing of the North American division, which will be one of the largest in the construction industry in recent years. "Since the transatlantic synergies are limited, the operation makes sense for me," says Martin Husler, analyst at Zurcher Kantonalbank, noting: "The valuations of American construction materials companies are higher than Holcim, so I consider it a positive operation."

The transaction has been planned for a long time, according to a source close to the situation.

Describing the United States as one of the most attractive global construction markets, Jenisch explained that the separation decision will help the new company capitalize on the region's boom in infrastructure and construction, Reuters notes. Holcim is the largest cement producer in North America, with 16,000 employees in 850 production units. The business competes in the region with companies such as Carlisle and RPM in the area of construction products and solutions, respectively with Eagle Materials and Summit Materials in the cement industry.

In the first nine months of 2023, the North American division was responsible for a quarter of Holcim's sales, with the US the most profitable region for the company. In recent years, the division's sales have grown by more than 20% on average.

"The US operations were simply too successful to remain a subsidiary," Jenisch concluded.

After the separation, the rest of the Holcim business will have sales of approximately 17 billion francs (nearly $20 billion) and 48,000 employees.