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Monday, 08 June 2015 08:42

Grandville cement plant to get new ownership after FTC action in Lafarge-Holcim deal

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The planned merger of two international cement producers will result in a new owner for a Grandville-based operation and could lead to more competitive pricing for the commodity in the West Michigan market.

In response to an antitrust complaint filed by the Federal Trade Commission that the merger of Switzerland-based Holcim Ltd. and Lafarge S.A. of France “would likely substantially lessen competition” in a dozen United States markets, including in Grand Rapids, the parties have agreed to divest 24 facilities in North America.

Among those sites is a Holcim (U.S.) Inc.-owned cement production terminal in Grandville, which the company plans to sell to Bethlehem, Pa.-based Buzzi Unicem USA Inc.

The acquisition of the Grandville facility should be completed roughly around the time the Holcim-Lafarge merger closes, said Patrick Lydon, vice president and general counsel at Buzzi Unicem.

Lydon said the Grandville site will be the company’s first venture into the Michigan market. He did not expect any significant changes to operations.

The FTC weighed in on the proposed merger to create LafargeHolcim, the world’s largest cement company with a projected $35 billion in annual revenues, because it said the acquisition would further concentrate the industry in 12 “already highly concentrated” markets. In the affected markets, Holcim and Lafarge are either the only two suppliers of portland cement or slag cement or are “at most” two of just four suppliers of the material, according to the FTC.

Allowing the merger to proceed would have increased the likelihood of consumers paying higher prices or accepting reduced services, the agency said. Because cement is heavy and fairly cheap, “transportation costs limit their markets to local or regional areas.”

Some West Michigan-area contractors had been tracking news of the merger and its implications on the Grandville operations.

“If the merger between Holcim and Lafarge went through as originally planned, it would have likely had an impact short term, but even more of an impact on long-term competitive pricing,” Greg Kerkstra, president and CEO of Grandville-based Kerkstra Precast Inc., said in an email to MiBiz. “Now that the FTC has determined a divestiture of some of these assets in particular markets … that could actually encourage even more competition than before the merger, in our eyes.”

Steve Doelder, vice president at Kent Companies Inc., said the commercial construction boom in recent years has led to high demand for cement, and he welcomed the potential for increased competition.  

“This ruling is delivered at a crucial time in West Michigan. The industry needs competition – not only from a free market perspective, but also in terms of capacity,” he said in an email.   

Other affected markets in Michigan included Detroit and northern Michigan. Holcim is selling a cement terminal in Elmira, Mich. near Gaylord to Buzzi Unicem and it is seeking buyers for terminals in Detroit and Dundee.

The FTC voted 4-1 to approve the settlement that included the plan for the two companies’ divestitures. Commissioner Joshua Wright issued a statement in which he concurred with the FTC’s actions in part, but he dissented over the ruling on certain markets, including Grand Rapids, where he said “the evidence is insufficient to provide a reason to believe the proposed transaction is likely to substantially lessen competition.”

On June 1, Holcim opened a public exchange offer for all shares of Lafarge. Holcim is offering nine shares of its company for 10 Lafarge shares. The merger, now in its final stages, is expected to close in July after the company cleared antitrust concerns and disputes over management structure, according to a report in the Wall Street Journal.

Messages seeking comment from representatives at Holcim were not immediately returned.  

Read 8139 times Last modified on Sunday, 28 June 2015 18:06

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