Holcim is emerging first among the equals in its agreed merger with cement rival Lafarge. The Swiss group has succeeded in preventing Lafarge's Bruno Lafont from becoming chief executive. It has also secured better merger terms. Lafarge's readiness to accept changes to the agreement of April 2014 suggests its shareholders were anxious about the alternatives.
Since last year the two share prices have diverged, turning what might have been a small value transfer from Holcim to Lafarge shareholders into something much larger. Holcim's stock market outperformance has now been recognised. Lafarge shareholders will receive a 0.9 share in the new group for every Lafarge share held, instead of the previous 1:1 ratio. The new terms mean Lafarge shareholders get 44 per cent of the combination, for contributing 43 per cent of the value based on March 19 closing values.
The new deal also leaves the CEO position of the enlarged company vacant, with Lafarge set to nominate someone for Holcim to accept. The candidate will probably come from the Lafarge side, say people familiar with the situation. This may assuage feelings and smooth the transition to the post-Lafont era. But the change is a clear sign of the Swiss company's strength in the negotiations - especially coming after its veto of the last nominee.
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It is easy to see why Lafarge budged on terms and governance, after having said it would revisit only the former. The transaction helps the French group de-gear, and Lafarge's spread of business may leave it more subject to weak economic news. The French company's share price has been more volatile than Holcim's since the deal was announced, suggesting its shareholders were more worried about a stand-alone plan B.
The merger will create a more liquid stock, helping any big investors in both companies who want to sell down. Other investors will hope that the governance fight is not a harbinger of a wider cultural clash.
