European corporate bosses may soon be following Jan Jenisch’s lead. In January, Holcim’s (HOLN.S) then-CEO announced he was splitting his U.S. business off from the rest of the Swiss building materials giant. President-elect Donald Trump’s return to the White House means that more companies could follow suit.
Jenisch, who now chairs Holcim’s board, was motivated by simple corporate finance logic. A third of his $30 billion of revenue in 2023 came from the U.S. But juicy subsidies and contracts under President Joe Biden’s Inflation Reduction Act and Infrastructure Investment and Jobs Act meant that the segment was growing at 20%-plus annually, against more pedestrian growth rates in Europe. More pressingly, investors were pushing for a way to buy into Holcim’s U.S. growth story without having to take on the European exposure too. Holcim’s $56 billion market capitalisation, which is a third higher than it was in January, implies that investors like the move.
Trump’s return is prompting a flurry of enquiries from other companies wondering what they should do, a senior banker told Breakingviews. That’s not necessarily because CEOs fear tariffs: energy-intensive companies like Holcim sell lots of their wares in the countries where they’re produced.
Rather, it’s partly because bosses fear missing out. Whatever the public-policy merits of a deregulatory wave under Trump’s efficiency tsar Elon Musk, it seems likely that CEOs operating stateside will have a freer hand in areas like carbon emissions and artificial-intelligence experimentation. That’s making European executives think the U.S. economy may motor in the next few years, exacerbating the long-term valuation premium of U.S. stocks relative to European ones.
More bluntly, some foreign bosses want to stay on the right side of Trump’s “America First” policy. While the president-elect may not gut all of Biden’s subsidies, he might opt to remodel the programmes to suit domestic players. Being a U.S. business with no foreign parent may help in that regard.
Plenty of big European groups have major U.S. operations. Carmaker and Jeep owner Stellantis (STLAM.MI) counted 45% of its 186 billion euros of 2023 revenue there, Visible Alpha data shows. UK-listed construction rental group Ashtead (AHT.L) has mulled moving its primary listing to the jurisdiction where it last year made over 85% of its sales. German energy giant RWE (RWEG.DE) may wonder whether its $7 billion deal in 2022 to acquire Con Edison’s clean energy business is worth tinkering with.
Prioritising the U.S. is far from a one-way bet. Trump’s tariffs could cause inflation, higher interest rates and an economic mess. And the European Union or China may retaliate with tariffs of their own. Even so, Holcim’s share-price performance this year suggests bankers will keep getting calls from would-be imitators.
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The S&P 500 Index was up 23% so far in 2024 when U.S. markets closed on Nov. 15. The STOXX Europe 600 Index was up 5% over the same period.
