Switzerland’s Holcim (SIX:HOLN) has announced plans to spin off its entire North American operations through a New York flotation, a strategic move that could potentially value the business at approximately $30 billion.
This significant development comes alongside the appointment of a new CEO, Miljan Gutovic, who will assume the role on May 1, succeeding Jan Jenisch. Holcim, one of the world’s largest cement manufacturers, anticipates completing this divestment in the first half of 2025.
Jan Jenisch expressed confidence in securing shareholder approval for the flotation, emphasizing their intention to completely separate Holcim’s North American business by listing 100% of it on the New York Stock Exchange, with Holcim retaining no ownership stake.
This bold step aims to unlock the full potential of the U.S. market, capitalizing on its robust infrastructure and construction boom.
The U.S. business currently generates annual sales of approximately $11 billion, and Holcim has ambitious goals to increase this figure to over $20 billion and achieve an operating profit exceeding $5 billion by 2030.
The remaining segments of Holcim’s global business, including operations in Europe, Latin America, Africa, and Asia, will continue to be listed on the Swiss blue-chip SMI index.
They will maintain their focus on providing innovative building solutions, such as roofing products. Jan Jenisch, who has led Holcim since 2017, will retain his position as chairman and oversee the planned listing in the United States.
This strategic move to list in the U.S. is expected to enhance the company’s valuation, as building materials companies typically command higher earnings multiples in the American market compared to Europe.
Holcim holds the distinction of being the largest cement manufacturer in North America, boasting a workforce of 16,000 employees spread across 850 sites.
In the North American market, it faces competition from industry players like Carlisle and RPM in the building products and solutions sector, as well as Eagle Materials (NYSE:EXP) and Summit Materials (NYSE:SUM) in the cement industry.
Throughout the first nine months of 2023, Holcim’s U.S. operations accounted for 20% of the company’s total sales and emerged as its most profitable region, consistently achieving sales growth exceeding 20% in recent years.
The remaining Holcim business is expected to maintain sales of around 17 billion Swiss francs and employ a workforce of 48,000 people.
Jan Jenisch justified the spin-off by emphasizing that the U.S. operations had become “simply too successful to be run as a subsidiary.”