Fitch Ratings has affirmed Holcim long-term issuer default ratings (IDR) at 'BBB', following its announcement to merge with Lafarge SA (Lafarge) through a public exchange offer with an exchange ratio of one new Holcim share for each Lafarge share. The outlook is stable.

The affirmation reflects the combined group's improved scale, diversification and market positions on completion of their announced merger and the synergy potentials between the two companies. We forecast funds from operations (FFO) adjusted leverage in excess of 3.5x for the combined group in 2015, compared to 3.5x for Holcim in 2013, given Lafarge's higher leverage and the contemplated all share transactions , with no additional debt to be raised by either.

We expect substantial disposal proceeds from the contemplated sale of around 10%-15% of the combined group's EBITDA, which could improve the combined group's financial flexibility, if proceeds are used to repay debt.