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Cement makers Holcim and Lafarge, seeking to save their merger, were discussing a new chief executive officer (CEO) appointment to the combined group that would see current Lafarge boss Bruno Lafont in a different role, sources said on Wednesday.
When the deal was announced in April 2014, Lafont was presented as the future CEO of what would be the world's biggest cement maker, but the Swiss side, Holcim, has since grown dissatisfied with his leadership and threatened to walk away if the issue was not resolved, the people said.
"The discussions are ongoing on all aspects of the deal, on the share exchange ratio and the governance," said one of the sources.
A second source said that Holcim was not calling into question that the marriage of the two groups was of equals - a concept that underpinned the deal's price and terms and allocated seven seats for each side on the board.
"This is not about the balance of the merger this is about one person," the second person said.
Another source said Lafont could be named co-chairman of the future company, alongside Wolfgang Reitzle, the current chairman of Holcim.
Lafont's brash style and tendency to brook no dissent among his management or with investors has proven difficult for the Swiss side to accept, said the sources.
A third person characterised the conflict as a cultural one, with Lafont emblematic of an imperialistic French CEO style and Holcim as a more consensual organisation.
Holcim and Lafarge presented the deal originally as a merger of equals with a one-for-one share swap, which would leave Holcim 53 percent of the new group.
But as the two sides spent months working on asset sales to get regulatory approvals, the performance of the two groups diverged, leading Holcim, under pressure from its shareholders, to call a halt to the deal under its old terms on Sunday with a letter to the Lafarge board.
It demanded better terms on the share exchange ratio and changes to the "governance" of the new group.
The decision to try to find a new role for Lafont within the combined group came about on Tuesday after the two largest shareholders of Lafarge, who together own 37 per cent of the shares and hold 5 board seats, pushed for the French group to open discussions to save the deal, the third person said.
Belgian investors Paul Desmarais and Albert Frere own 21 per cent of Lafarge via a holding company, while Egyptian businessman Nassef Sawiris owns 16 percent.
Shares of Lafarge rose 6 per cent on Wednesday after the Reuters report, making them the largest gainer on the blue-chip index. Holcim rose 2.25 percent.
An agreement could be found between Holcim and Lafarge and announced by later on Wednesday or Thursday, two of the sources said.
There is pressure to find an accord soon because Irish building materials group CRH, which is supposed to buy a chunk of European assets from Lafarge and Holcim to help them get antitrust clearance, has a shareholder meeting scheduled for Thursday to ratify the acquisition.
