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Switzerland's Holcim (HOLN.VX) and France's Lafarge (LAFP.PA) have agreed new terms for their plan to create the world's biggest cement company, giving unhappy shareholders in the Swiss firm a better deal.

While the merger is back on track after a rocky few weeks, the two firms have yet to agree who will run the combined entity with annual sales of more than 30 billion euros ($32 billion).

After days of intense negotiations, the two agreed Lafarge shareholders would now receive nine Holcim shares for every 10 shares in the French company, rather than the one-for-one ratio agreed when the deal was unveiled in April last year.

The companies also agreed that Lafarge boss Bruno Lafont would no longer become chief executive and instead take on the role of non-executive co-chairman, alongside Holcim's chairman.

However, the firms did not announce a new chief executive on Friday, leaving question marks over what tensions remain between the two and making the deal look less like the merger of equals it was presented as almost a year ago.

"This is not enough to secure the deal, and it's not the end of the story," analysts at Bernstein said in a research note.

Since the merger was announced almost a year ago, Holcim investors had watched the companies' relative business performances diverge. A stronger Swiss franc also became a factor, along with questions over Lafont's style and record.

Holcim shares rose 1.3 percent to 76.75 Swiss francs and Lafarge stock was up 3.1 percent at 64.20 euros at 1020 GMT after the revised deal was announced.

BRASH

Lafont's proposed role had become a major sticking point for Holcim, which threatened to abandon the deal on Sunday if the terms were not revisited. The Swiss side questioned his ability to deliver the 1.4 billion euros in promised cost savings and disliked his brash management style, sources have said.

"My attitude since Sunday has been to show that men should not prevent this merger from going through and on the contrary should do everything to make it possible," Lafont told reporters on a conference call.

Under the revised deal, Lafont will be co-chairman along with Holcim Chairman Wolfgang Reitzle. Lafont is due to propose a new chief executive in the coming weeks, who would then have to be accepted by Holcim's board. A source close to the situation said the plan was for a new candidate to be named before Holcim's annual shareholder meeting on May 7.

Beat Hess, Holcim vice-chairman, will hold the same role on the new board.

"This adjustment maximises the deal's chances of success," Lafont said, adding that he was satisfied with the new terms and insisting the deal was still a merger of equals.

The new share-swap ratio means Holcim shareholders would own 55.6 percent of the new group, up from 53 percent previously, and the deal is now expected to close in July rather than June.

RUSSIAN KEY

The companies also said certain key shareholders on both sides had confirmed their support for the revised merger terms.

Thomas Schmidheiny, a former Holcim chairman, heir to its founder and who has a 20.1 percent stake, said he welcomed the new agreement.

"This is a strong signal that the industrial logic of the integration has prevailed and with it its long-term perspectives," he said in a statement.

"This breakthrough was only made possible because all people involved attached more importance to the interests of the new corporation than to their own ambitions."

The position of Russian businessman Filaret Galchev, who owns 10.8 percent of Holcim via Eurocement Holding AG, could be key. A spokesman for Eurocement was not immediately available for comment.

Nassef Sawiris, who owns 16 percent of Lafarge, told Reuters on Thursday he backed the deal and was not worried about Holcim shareholders not voting for it.

The new company will also pay a scrip dividend of 1 new LafargeHolcim share for each 20 existing shares after completion. Analysts said the aim of this could be as a lock-in bonus for existing shareholders.