LafargeHolcim, the world’s biggest cement company, has agreed to buy Firestone Building Products from Japan’s Bridgestone Corporation for $3.4bn as it seeks to strengthen its position in the US.
The Swiss group said the acquisition, which it financed with cash and debt, would allow it to break into the lucrative flat roof market, valued at about $50bn globally.
The US is already LafargeHolcim’s largest market, responsible for $4.5bn in sales last year.
The acquisition of Firestone, which specialises in roofs that can be equipped with solar panels, thicker insulation and greenery, would add a further $1.5bn in value, said chief executive Jan Jenisch.
“The future of the roof is flat, green and insulated,” he said.
Firestone generated 90 per cent of its $1.8bn in sales last year in the US but “we want to make it global by pushing into Latin America and Europe,” said Mr Jenisch.
The market for flat roofs, which tend to be used in warmer climates and are more easily adapted with solar panels to reduce emissions, is fragmented. The top 10 groups control 35 per cent of the market, Mr Jenisch added. “It's a chance for us to become a leader.”
It is also a market that Mr Jenisch expects to grow. “Climate change is unfortunately an amazing new business for us and I think we have a solid market ahead.”
The building materials group, which operates 120 cement plants across the world, promised last year to slash its carbon emissions by 20 per cent by the end of the decade — a task that will be made harder as the company expands. Cement is responsible for about 8 per cent of global CO2 emissions.
The deal also represents a vote of confidence by LafargeHolcim in the recovering construction industry, which Mr Jenisch said would be boosted by “government stimulus packages around the world”.
The pandemic had encouraged people to reassess “where and how they live,” he added.
Dismissing fears of an economic contraction this year, Mr Jenisch said the health of his company depended on other factors, including “population growth and rapid urbanisation”.
LafargeHolcim has reduced its debt by about $6bn in the four years since Mr Jenisch took charge and had a relatively strong 2020 despite the pandemic, with order volumes recovering in the second half.
“The big Covid impact was in April when construction sites in Europe and the UK were locked down,” he said.
The company is now in a strong position to make further “bolt on acquisitions later this year,” he added, “but this is the big one, the transformational buy.”
Taylor Cole, Firestone Building Products president, said the company was in a “prime position to accelerate our growth” and could now “look forward to becoming part of the global leader in building materials and solutions.”
Shares in LafargeHolcim rose by 1 per cent following the announcement.