ZURICH (Reuters) – Holcim shares were Europe's best performer on Monday after investors cheered Holcim's plans to spin off its North American operations and list them on the New York Stock Exchange.
Holcim on Sunday announced plans to spin off the business to shareholders, potentially creating a new company with a market valuation of about $30 billion.
The company's shares rose 3.8% in early trading, rising to the top of the Stoxx Europe 600 index.
The company's largest shareholder, Thomas Schmidhaney, has expressed support for the deal, which will create two companies. One will supply cement, concrete and roofing materials in North America, and the other will serve the rest of the world.
Schmiheiny, the great-grandson of Holcim's founder and former chairman of the company, owns about 7% of the company, according to his spokesperson.
“Mr. Schmidhaney fully supports the separation and listing of the U.S. business and believes this is in line with industry logic,” the spokesperson told Reuters.
Holcim CEO Jan Jenisch told reporters early Monday how optimistic he is about the outlook for the company's North American business, said to be the world's most attractive construction market.
He said the domestic shoring trend, where companies bring production back to the United States, and the domestic housing shortage are key growth drivers for building materials suppliers.
“For us, we believe this is going to be a rock star business,” Jenisch said. “At the same time, we also have scale in North America with sales of more than $11 billion and more than 850 state-of-the-art manufacturing facilities.
“This is our model for accelerating growth and becoming a $20 billion company in North America alone.”
Jaenisch said market momentum would not be affected by the possibility of a presidential change after elections later this year.
“I don't see any risk why we would need to change this,” Jenisch said. “I think rebuilding infrastructure, reindustrializing, and reinvigorating the housing market at some point is probably a priority for any government in the United States.”
Meanwhile, the remaining Europe, Latin America, Asia and Africa operations are expected to increase free cash flow from around CHF2 billion ($2.32 billion) now to CHF3 billion by 2030, and are expected to increase their free cash flow to CHF3 billion by 2030, with There is a possibility that you can support it by buying.
Analysts expressed positive views on the deal, citing the high price multiple of the U.S. construction company.
“We view the separation of North American assets as a prudent move from a shareholder value creation perspective, and we expect the stock to respond significantly positively today,” said Berenberg's Harry Goad.
(1 dollar = 0.8619 Swiss Franc)
(Reporting by John Revill)
