The long-term production capacity of the cement market is seriously overcapacity, and is also constrained by resources, energy, ecological governance, environmental protection index, etc., and Luo Zhiguang hopes to bring new growth opportunities for Lafarge, through the innovation of products and solutions.
In 2004, Song Zhiping, chairman of China Building Materials Group, went to France to visit century-old building materials giant Lafarge. He was planning to buy Hunan Shaofeng cement and Jiangxi evergreen cement to introduce Lafarge as a strategic investor. After listening to Song Zhiping’s idea, Lafarge concerned asked him, “if you make cement, where are you going to do it?” Song Zhiping immediately took out a map of China and compared it with each other. Hunan, Jiangxi and Jiangsu and Zhejiang were all circled in.
Although the final Lafarge did not have a stake in China’s building materials, the industry’s giant was so sure of the idea that Mr. Song’s idea of building a cement company in the southern part of China was bolstered by the merger. So, when China’s building materials were listed, Song Zhiping started a joint reorganization. In the next ten years, the merger and reorganization also became the key word in the cement industry. In 2015, the world’s two largest multinational cement enterprises, Lafarge and Haerry, chose to merge, and the new company was named Lafarge, which was the largest of the world’s building materials industry. The pattern of the global cement industry has also been changed.
Luo Zhiguang, president of greater China in Lafakiri, said in an interview with Chinese entrepreneurs at the second China International Import Expo that the merger of Lafakhauri has become the largest merger in the history of the world cement industry, and that joint mergers have always been a way to upgrade and promote various industries without violating the Competition Law and the relevant regulations of the local government. In the 1990s, Lafarge, founded in 1833, and Horry, Switzerland, founded in 1912, entered China one after another, but the two companies did not operate in the same way in China. According to Luo Zhiguang, Lafarge is good at operation and management, so he mainly operates in China. is to invest in plant building, acquisition or joint venture. In November 2005, Lafarge and Hong Kong Ryan announced the merger of their cement operations in China and a joint venture to establish Lafarge Ryan Cement. In November of the same year, Lafarge also acquired a 66.5 percent stake in Sichuan Shuangma, becoming the actual controller of Sichuan Shuangma. But unlike Lafarge, howree operates in China by investing in equity. In 2005, haorui became the largest shareholder in Huaxin cement with a 26.1 per cent stake.
So far, the two cement giants to take a stake in Chinese listed companies began to develop rapidly. At that time, the total profits of the national cement industry were not as good as those of a Swiss cement company, according to media reports. At its peak, Lafarge’s market share in the southwest was as high as 20 percent, making it a veritable “southwest king.” However, in the next decade, China’s cement industry overcapacity, Lafarge also fell into losses.
In a paper published by the Chinese Institute of Cement, “Lafarge, Haerry M & A”, it is pointed out that the combination of Lafarge and Haerui is because the world economy continues to be depressed and the capacity of cement industry is overcapacity, and the combination can let Lafarge and Haerry peel off some of its assets in Europe and North America, Second, the merger of the two major industry giants is likely to form the oligopoly, which will greatly enhance the bargaining pricing power of the group companies.
But in fact, the most fundamental reason for the merger is that the two companies face the dilemma of development. Affected by depressed market demand and high debt, corporate profits are no longer growing and are in a position to stay where they are. In April 2014, Lafarge and Holly jointly announced that Lafakiri, the largest group in the construction materials industry, would be born, and the two sides reached a merger agreement in the form of an 1:1 stock exchange. But since then, as a result of the decline in Lafarge’s performance, the negotiations have resumed, and the two sides have finally reached a new stock exchange merger agreement in the form of a 0.9% exchange of shares. In July 2015, the global merger of the two companies announced In 2016, Huaxin cement announced that it had signed a Framework Agreement with Lafarge China cement Co., Ltd. On the transfer of part of Lafarge China’s non-listed cement assets in China. Huaxin cement plans to spend 1.4 billion yuan to acquire seven subsidiaries of Lafarge China in Chongqing, Yunnan and overseas markets. Lafakiuri will China part of the unlisted cement assets into China New cement.
At present, the operation of Lafakiri in China is mainly carried out through Lafakiri Sichuan and Huaxin cement, mainly in 10 cities, including Hubei, Hunan and Jiangsu, as well as Cambodia, Tajikistan, Uzbekistan and Nepal.