PARIS (Reuters) - The world's two largest cement makers, France's Lafarge (>> LAFARGE) and Switzerland's Holcim (>> Holcim Ltd), on Saturday agreed on the terms of a merger that would create a company with a stock market value of around $55 billion, French newspaper Le Figaro reported on its website.

Representatives at Lafarge and Holcim were not immediately available to comment on the story, which did not say how it got the information.

The two companies had already issued dual statements on Friday announcing they were in advanced talks to merge, a deal which would help them slash costs, trim debt and better cope with the soaring energy prices and weaker demand that have hurt the sector since the 2008 economic crisis.

The transaction will see Holcim launch a public takeover offer for Lafarge, payable entirely in shares, Le Figaro said. If successful, the combined entity will be based in Switzerland but will have operational headquarters in both Switzerland and France. Lafarge Chief Executive Officer Bruno Lafont will become CEO of the combined entity while the chairman will be Swiss, according to the report.

But any deal is likely to draw scrutiny from European competition watchdogs, as a Lafarge-Holcim entity would have a dominant position in both Europe and the United States.

Regulators would probably require the companies to shed cement plants and distribution facilities before approving any merger.

(Reporting by Lionel Laurent; Editing by Lisa Shumaker)

Stocks treated in this article : LAFARGE, Holcim Ltd