2. Changes in the scope of consolidation

2.1 Business combinations and divestments during the current reporting period

South Korea

The Group signed an agreement with a consortium of private equity funds Glenwood and Baring Asia for the divestment of Lafarge Halla Cement corporation in South Korea. This transaction was closed on April 29, 2016 for a total consideration of CHF 522 million and resulted in no gain or loss before taxes.

Morocco and Sub-Saharan African countries

On March 17, 2016, the Group signed an agreement with SNI, its historical partner in Morocco, to enlarge its joint venture by merging Lafarge Ciments and Holcim (Maroc) S.A. The transaction was effected on July 4, 2016 as a result of the shareholders of Lafarge Ciments and Holcim (Maroc) S.A. agreeing to merge the two companies on that date by an exchange of shares, the new merged company being renamed as LafargeHolcim Maroc. As a result, the Group deconsolidated Holcim (Maroc) S.A. and recorded a net gain before taxes of CHF 236 million for a total consideration of CHF 498 million, of which CHF 233 million were received in cash.

In conjunction with the transaction above, the Group further agreed to reinforce its partnership with SNI by creating a joint venture for Francophone Sub-Saharan Africa, to be named LafargeHolcim Maroc Afrique. Four African companies are to be sold to the joint venture and are subject to relevant regulatory authorities’ approval, customary closing conditions and the approval of the shareholders of each company. On July 4, 2016, Société de Ciments et Matériaux (SOCIMAT) in Ivory Coast was sold to the joint venture for a total consideration of CHF 73 million resulting in a net gain before taxes of CHF 9 million. The remaining three African companies are expected to be sold to the joint venture in the fourth quarter 2016.

Sri Lanka

On July 25, 2016, the Group signed an agreement with Siam City Cement Public Company Limited for the divestment of its entire interest in Holcim (Lanka) Ltd. The transaction was closed on August 10, 2016 for a total consideration of CHF 365 million and resulted in a net gain before taxes of CHF 225 million.

Saudi Arabia

The Group signed an agreement for the divestment of its 25 percent interest in the joint venture Al Safwa Cement Company in Saudi Arabia to El-Khayyat Group. The transaction was closed on August 17, 2016 for a total consideration of CHF 123 million and resulted in a net loss before taxes of CHF 9 million.

2.2 Finalization of the merger between Holcim and Lafarge

The merger between Holcim and Lafarge announced publicly on April 7, 2014 became effective on July 10, 2015 after completion of the public exchange offer filed by Holcim Ltd for all the outstanding shares of Lafarge S.A.

As at July 9, 2016, the purchase price allocation was completed and therefore the fair values assigned to the identifiable assets acquired and liabilities assumed became final. There were no changes made in the purchase price allocation during the third quarter 2016. The main changes in the purchase price allocation in 2016 related to property, plant and equipment and contingent liabilities and resulted in an increase in the goodwill of CHF 522 million. As the effect on depreciation, amortization and other income is immaterial, the 2015 comparative information has not been restated. The final fair values of the net assets acquired are as follows:

Million CHF

Fair Values disclosed in Q4 2015

PPA refinements in 2016

Final Fair Values

Cash and cash equivalents

1,704

 

1,704

Accounts receivable

2,544

(8)

2,536

Inventories

1,706

(33)

1,673

Prepaid expenses and other current assets

571

 

571

Assets classified as held for sale

4,874

 

4,874

Total current assets

11,399

(41)

11,358

Long-term financial assets

657

(21)

636

Investments in associates and joint ventures

1,644

(5)

1,639

Property, plant and equipment

20,177

(339)

19,838

Intangible assets

1,030

 

1,030

Deferred tax assets

99

2

101

Other long term assets

56

 

56

Total long-term assets

23,663

(363)

23,300

Trade accounts payable

2,074

(10)

2,064

Current financial liabilities

2,272

 

2,272

Current income tax liabilities

81

 

81

Other current liabilities

1,646

9

1,655

Short term provisions

106

 

106

Liabilities directly associated with assets classified as held for sale

367

 

367

Total current liabilities

6,546

(1)

6,545

Long-term financial liabilities

13,320

 

13,320

Defined benefit obligations

1,194

 

1,194

Deferred tax liabilities

2,732

(85)

2,647

Long-term provisions

992

271

1,263

Total long-term liabilities

18,237

186

18,423

Fair value of net assets acquired

10,279

(589)

9,690

 

 

 

 

Non-controlling interest

2,407

(67)

2,340

Fair value of net assets acquired attributable to shareholders of LafargeHolcim Ltd

7,872

(522)

7,350

 

 

 

 

Consideration for the business combination

19,483

 

19,483

Fair value of net assets acquired attributable to shareholders of LafargeHolcim Ltd

7,872

(522)

7,350

Goodwill

11,611

522

12,133

2.3 Business combinations and divestments during the previous comparative reporting period

Divestments

On January 5, 2015, LafargeHolcim disposed of Holcim (Česko) a.s. in Czech Republic, Gador cement plant and Yeles grinding station in Spain for CHF 243 million to Cemex.

On March 30, 2015, LafargeHolcim sold its entire remaining shareholding of 27.5 percent in Siam City Cement Public Company Limited in Thailand via a private placement in capital markets for a total consideration of CHF 661 million.

On July 1, 2015, LafargeHolcim disposed of its entire lime business in New Zealand. This resulted in a gain on disposal before taxes of CHF 68 million. The transaction was settled on October 7, 2015.

LafargeHolcim also divested a number of entities and businesses as part of a rebalancing of the global portfolio of the combined group resulting from the merger and to address regulatory concerns. On July 31, 2015, LafargeHolcim disposed of assets and operations to CRH mainly in Europe, North America and Brazil, followed by assets disposed of in the Philippines on September 15, 2015.

Acquisition

On January 5, 2015, LafargeHolcim acquired control of a group of companies from Cemex which operate in Western Germany and the Netherlands for a total cash consideration of CHF 210 million.