Holcim shares benefit from spin-off of US business
Published: Monday, Jan 29th 2024, 10:50
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Holcim shares are trading significantly higher in early trading on the Swiss stock exchange on Monday. The plans communicated over the weekend to spin off and list the North American business have met with approval in investor circles. However, there are also critical voices and question marks.
Specifically, Holcim shares gained 4.2 percent to CHF 66.90 at 10.30 a.m. in a slightly firmer overall market (leading SMI index +0.09%). With this price gain, Holcim shares have thus achieved a positive annual performance in 2024, but are still among the weakest of the blue chips, the largest stocks on the stock market. Last year, however, the shares gained almost 38%.
Stock market analysts are largely positive about the move. With the planned listing of the dynamically growing business in the USA and Canada, the valuation potential should become more clearly visible, says ZKB expert Martin Hüsler. Harry Goad of Berenberg Bank also believes that Holcim wants to use the move to release the "hidden" values of the US companies.
In fact, the North American business has grown very dynamically in recent years - not least thanks to US President Joe Biden's gigantic infrastructure programs. The disadvantage for shareholders of the "old" Holcim is that they will no longer be able to participate in the growth of the US construction market, says Goad.
Jefferies expert Glynis Johnson's criticism starts at a different point: In her opinion, it is not the North American Holcim companies that are currently valued too low on the stock market. Instead, a lot of goodwill is lying idle in the other almost 70 countries in which Holcim is active.
With regard to the planned transaction, Johnson therefore speaks of a "zero-sum game". From the shareholders' perspective, the situation would be different if the Group were to sell its business in North America at a substantial premium.
And Johnson addresses another problem: What should Holcim shareholders who are unable to hold the US-listed shares do? They would have to sell their shares immediately after receiving the US shares. This could possibly trigger resistance among shareholders.
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