Lafarge shareholders will receive one Holcim share for every Lafarge share held, with the combined group to be based in Switzerland and listed in Zurich and Paris, the companies said in a joint statement on Monday.
"The new group will offer higher growth and low risk, thus creating more value," said Lafarge Chief Executive Bruno Lafont, who will become CEO of LafargeHolcim.
In an interview with CNBC on Monday, Lafont described the deal as a "fantastic" opportunity for Lafarge shareholders.
"There is a fantastic value proposition for our shareholders to improve their portfolio, to improve growth exposure, to create a fantastic value creation exercise through the synergies. So we confirm growth, we limit risk, or we reduce risk, and we increase, of course, returns," he said.
The transaction would be the industry's biggest-ever tie-up, and would help the companies 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 companies added that they expected total annual savings from joining forces of 1.4 billion euros.
The deal will result in "very limited" job cuts, Lafont told CNBC.
"There will be a very limited impact of this deal on jobs and there will be no plant closure linked to this transaction," he said.
"We will do our utmost to create the conditions for every employee, belonging to both of groups (Lafont and Holcim), to find the best future with the group or with the assets we will divest."
The deal is expected to draw scrutiny from competition watchdogs, with UBS analysts pointing to antitrust issues in key markets including Brazil, Canada, Ecuador, France, the UK, the United States, Morocco and the Philippines.
"Given the number of potential issues and required remedies, we expect a lengthy approval process, possibly taking up to two years," UBS analysts wrote.
Rolf Soiron, the chairman of Holcim, told CNBC on Monday that he was "not too much concerned" about the merger being challenged. Instead, he said the deal offered "an enormous chance" to boost competition in Europe.
"It is very possible that through these spin-offs or these proposals there will be a new competitor arising in Europe, which is exactly what the regulatory authorities are aiming at. And I tell you, we have learnt to like competition, because it is really true that competition helps a company to develop," Soiron said.
Lafarge and Holcim confirmed on Monday that they would divest part of their portfolio worth 10-15 percent of global earnings before interest, tax, depreciation and amortisation (EBITDA) to satisfy antitrust concerns. Lafont told CNBC this would represent about 5 billion euros of revenue.
The two companies have combined EBITDA of 6.5 billion euros. Two-thirds of the asset sales would be in Europe, Lafont said on a conference call.
The transaction, which has the support of both boards and the companies' core shareholders, is expected to close in the first half of 2015, the companies added.