M&A is the order of the day for Europe's share markets as Holcim and Lafarge agree new terms and the UK's TSB bank says 'yes' to Sabadell. David Pollard reports.
It's been billed as a merger of equals to create the world's largest cement company. Only - not quite. After a rocky few weeks and some intense negotiations, Holcim and Lafarge say they have new terms for getting together. Markets seemed to like them: Lafarge shares up by 3 per cent in early trade, Holcim's by over a percent. Lafarge shareholders will now get nine Holcim shares in exchange for ten of their own - not the one-for-one deal mooted before. That gives Holcim nearly 56 per cent of a combined entity whose annual sales will top 30 billion euros. The revised deal also ousts this man from becoming the chief exec of the new firm. Lafarge boss Bruno Lafont - said to be a controversial figure with Holcim for his 'brash' style - will be co-chairman instead. Changes had to be made, says BGC's Mike Ingram, to address Holcim's recent concerns. SOUNDBITE (English) BGC PARTNERS MARKET ANALYST, MIKE INGRAM, SAYING: ''Those concerns had been heightened because recent results from Lafarge have been somewhat disappointing and real doubts as to whether under Bruno Lafont's leadership the merged entity could actually deliver the 1.4 billion euros per annum cuts which were the raison d'etre of this merger in the first place.'' Sabadell and UK bank TSB have confirmed their union, too. The Spanish bank talking of big plans for the future after the 1.7 billion pound takeover. It wants to grow TSB into a real challenger to the UK's big four of Barclays, RBS, HSBC and, of course, LLoyds - from which TSB was spun off last year. Sabadell offering 340 pence per TSB share. A 29 percent premium that looks good for TSB shareholders - including Lloyds, which still owns half. Sabadell shareholders though perhaps less delighted since reports of the deal first emerged over a week ago. SOUNDBITE (English) BGC PARTNERS MARKET ANALYST, MIKE INGRAM, SAYING: ''Investors clearly less sure about the benefits to Sabadell. If you look at the performance of the share price there, since the announcement, it's been hit by about 10 per cent and certainly the numbers that I've seen suggest that at least in year one it's likely to be earnings-dilutive for Sabadell.'' Sabadell's raising 1.6 billion euros to finance the deal. The need for further funding seen, potentially, as something that could hold it back.