The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

By Aimee Donnellan

DUBLIN, June 23 (Reuters Breakingviews) - Holcim HOLN.S has finally done the splits, but in a surprising way. The Swiss building materials group on Monday completed the spinoff of its $29 billion U.S. unit, Amrize AMRZ.N, after the latter commenced trading as a separate entity. Investors look to be more excited by its legacy non-U.S. arm, which will continue to be called Holcim.

When then CEO Jan Jenisch announced the breakup of the cement giant in January 2024, the U.S. market was the place to be. Former U.S. President Joe Biden was three years into a plan to unleash a flurry of new building projects, thanks to a $2.3 trillion infrastructure plan that tended to favour US-based companies. Meanwhile, France and Germany were cutting spending in an effort to balance their books. But President Donald Trump’s decision to impose global tariffs on friends and foes alike, plus a lack of clarity on his plans for infrastructure, have flipped the script.

Monday’s performance of the two now-separate businesses suggests as much. Shares in Amrize fell 12% versus the average price brokers expected the business to be worth in early morning trading in Switzerland, giving it a market capitalisation of $29 billion. Holcim’s stock, meanwhile, soared 15% -- making it worth $38 billion.

Back in March, Jenisch reckoned Amrize could grow the $3.2 billion EBITDA the unit delivered in 2024 by between 8% and 11% annually up to 2028. Assume the U.S. company can deliver 9.5% growth, the mid-point in the forecast, and by 2028 the EBITDA would reach $4.6 billion. Had it traded on a 12.5 times multiple, in line with U.S. peers Martin Marietta Materials MLM.N and Vulcan Materials VMC.N, Amrize could conceivably have been worth $57.5 billion including debt – almost as much the unsplit companies’ $66 billion value on Friday.

In fact, it’s nowhere near that. At $29 billion, Amrize is worth around seven times its 2028 EBITDA, assuming it takes 40% of the original company’s $8.5 billion net debt pile. That’s some way off where its intended U.S. peers are, suggesting investors are dubious either that they are similar or that the hoped-for EBITDA will materialise.

The Holcim rump, by contrast, looks more appealing. Given previous LSEG-compiled analyst assumptions of $10 billion of 2028 EBITDA for the unsplit group, it should make over $5 billion. With 60% of the debt the implied multiple exceeds seven times EBITDA, a slight premium to rivals like Heidelberg Materials HEIG.DE. That’s a testament to the fact that rearmament and German infrastructure spending now looks much more positive. And that the EU now - somewhat surprisingly - looks the place to be.

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CONTEXT NEWS

Cement giant Holcim on June 23 completed the spin-off of its North American business Amrize.

Shareholders were given one Amrize share for every share in Holcim in the 100% spin-off of the business, which the Swiss-listed company said aimed to sharpen its focus on the different market dynamics in North America compared with the rest of the world.

Amrize shares opened at 46 Swiss francs on the Six Swiss Exchange, giving it a market capitalisation of 24.7 billion Swiss francs ($30.24 billion), in line with the company's expectations for a roughly $30 billion valuation. The company expected Holcim to trade at around 47.6 Swiss francs.

Holcim shares have fallen 33% since June 20 to reflect the separation of the North American business, although by 1411 GMT on June 23 they were trading 13.9% above the reference price estimated by brokers for the new stand-alone business.

The spin-off decision was announced in January 2024.

(Editing by George Hay; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on DONNELLAN/Aimee.Donnellan@thomsonreuters.com))