LafargeHolcim, the world’s largest cement maker, announced its $3.4 billion purchase of Firestone Building Products from Japan’s Bridgestone Corporation in the company’s largest acquisition in more than a decade.
This is the biggest deal in the era of the company’s CEO, Jan Jenish, who, since taking office in 2017, has focused on repaying the company’s debts and moving away from low-profit markets and small-business acquisitions. This deal will help LafargeHolcim take advantage of the growing demand for rooftops that generate solar energy.
Jenish stated that the company’s current focus is on growth through its plans to expand the Firestone Building Products business outside the United States, which currently accounts for 90% of its annual sales of $1.8 billion, the Firestone Building Products business generated an operating profit of $238 million in 2020.
Half of the transaction will be funded in cash by LafargeHolcim, while the other half will be funded by a bond issue, and the company expects the transaction to generate cumulative profits starting in its first year, in addition to growing its core sales by approximately 5%.
Jenish stated that there is an opportunity for rapid growth in the global market for flat roofs, which is estimated at $50 billion, and is expected to reach $65 billion by 2027, referring to the increasing demand for roofs that generate solar energy.
Analysts said the deal, despite its high price, will help LafargeHolcim expand its solutions and product business, which requires less capital than its cement business, and according to the stock market, the company’s shares rose 1% in early trading.