Lafarge and Strabag have announced they are to merge their cement businesses in several Central European countries. The new company will be 70% owned by Lafarge and 30% owned by Strabag, and will be headquartered in Austria.

Under the agreement, Lafarge will contribute its cement plants in Mannersdorf and Retznei in Austria, Cížkovice in Czech Republic and Trbovlje in Slovenia to the venture, while Strabag will contribute the plant it is currently building in Pécs in Hungary. The total capacity of all five plants will be 4.8 million tonnes of cement per year.

By combining their activities on the Austrian, Czech, Hungarian, Slovak and Slovenian markets, the two companies expect to generate savings and synergies.

Strabag CEO, Dr Hans Peter Haselsteiner said,  "The deal helps us to secure exactly the amount of cement we need in a year, namely 1.5 million tonnes, in just those countries in which we need it. It also allows us to achieve economies of scale in procurement and administration and to profit from the know-how of the global cement market leader."

Lafarge Chairman & CEO Bruno Lafont added, " This strategic move will allow both companies to better cross our respective understanding and knowledge of customers' needs and producer capabilities. We believe it will contribute to product and services development in the near future and will be a benefit to our customers. Thanks to the larger industrial network created, we will also have value creation opportunities, notably through logistics optimisation."

The deal is subject to various regulatory approvals, but it is hoped the new holding company, Lafarge Cement CE Holding GmbH, will become operational on 1 January 2011.