Holcim: Investors Look Favorably at Separate U.S. Listing

Narrow-moat Holcim announced it will be separately listing its North American business, which currently contributes 40% of group revenue, pending shareholder approval. The decision makes strategic sense given limited synergies for building materials across geographies. We expect the decision to be viewed favorably by shareholders since shares in the U.S. trade at a premium to European businesses and will likely support a higher market valuation for the business, evident by the 4% jump in the share price. CRH, which is a direct competitor with Holcim, has recently benefited from a multiple rerating by similarly shifting its primary listing to the United States from Europe. However, Holcim’s North American business is much smaller than CRH’s and is also more exposed to cyclical end markets, therefore we maintain our current CHF 60 fair value estimate. Shares are fairly valued.