By Leila Abboud, Gilles Guillaume and Anjuli Davies

PARIS/ZURICH (Reuters) – Cement makers Holcim and Lafarge , seeking to save their merger deal, are discussing a new leadership for the combined group which would give Lafarge’s boss Bruno Lafont a lesser role, sources familiar with the matter said on Wednesday.

When the deal was announced in April last year Lafont was presented as the future chief executive of what would be the world’s biggest cement maker. But the Swiss side has since grown dissatisfied with his leadership and financial track record, the people said.

Lafont could be named co-chairman of the future company, two of the sources said, alongside Wolfgang Reitzle, the current chairman of Holcim.

Lafarge’s financial director Jean-Jacques Gauthier is a possible candidate for the post of CEO, said two of the people.

The discussions over the leadership as well as the share exchange ratio of the deal are continuing, the people said, and could still evolve or break down.

“The discussions are ongoing on all aspects of the deal, on the share exchange ratio and the governance,” said one of the sources.

The boards of Holcim and Lafarge are scheduled to meet later on Wednesday.

A second source said that Holcim was not calling into question whether the marriage of the two groups was a merger of equals – the basis of the deal’s pricing and other terms and allocation of seven seats aside on the board.

“This is not about the balance of the merger this is about one person,” the second person said.

Lafont’s brash style and tendency to brook no dissent among his management or with investors has proven difficult for the Swiss side to accept, said the sources. The second person characterised the conflict as a cultural one, with Lafont seen as representing an imperialistic French CEO style and Holcim as a more consensual organisation.

Lafont has headed Lafarge since 2007 and was the architect of the acquisition of Egypt-based peer Orascom that saddled the company with debt.

Some on the Swiss side have also began to question Lafont’s ability to deliver promised cost savings of 1.4 billion euros a year from the tie-up.

“He had 11 months to earn trust and confidence and he didn’t,” said the second person, referring to Lafont.

“The whole value proposition of the merger rests on management and the ability to realise synergies … there are plenty of good people at Lafarge that Holcim would be happy with.”

Holcim and Lafarge originally presented the deal as a merger of equals with Lafarge shareholders getting one new Holcim share for every Lafarge share, which would leave Holcim with 53 percent of the combined group.

But as the two sides spent months working on asset sales to get regulatory approvals, the performance of the two groups diverged, leading Holcim, under pressure from its shareholders, to call a halt to the deal under its old terms on Sunday with a letter to the Lafarge board.

It demanded better terms on the share exchange ratio and changes to the “governance” of the new group.

The decision to try to find a new role for Lafont within the combined group came about on Tuesday after the two largest shareholders of Lafarge, who together own 37 percent of the shares and hold five board seats, pushed for the French group to open discussions to save the deal, the third person said.

Belgian investors Paul Desmarais and Albert Frere own 21 percent of Lafarge via a holding company, while Egyptian businessman Nassef Sawiris owns 16 percent.

Shares in Lafarge were up 5.6 percent at 62.72 euros by 1608 GMT, making them the largest gainer on the French blue-chip index <.FCHI>. Holcim’s share price was up 3 percent at 75.10 francs.

A new agreement could be reached between Holcim and Lafarge and announced later on Wednesday or on Thursday, the sources said.

There is pressure to find an accord soon because Irish building materials group CRH , which has agreed to buy a chunk of European assets from Lafarge and Holcim to help them get antitrust clearance, has a shareholder meeting scheduled for Thursday to ratify the acquisition.

CRH shares were up 1.1 percent at 24.60 euros.

Bernstein analyst Phil Rosenberg welcomed the apparent progress being made in talks but said the public nature of the tussle had damaged investors’ confidence in the deal.

“Even if the boards come out tomorrow and say we have kissed and made up, this story will not be over,” he said. “A growing number of Holcim shareholders oppose the deal on any terms, and the outcome of the shareholder vote remains wide open.”

Holcim shareholders will have a vote on the deal, while Lafarge shareholders would have to decide whether to tender their shares.

The companies aim to close the deal before mid-year.

(Additional reporting by Oliver Hirt and Matthieu Protard; Editing by Andrew Callus, Greg Mahlich)