Cemex

CemexThe Globalization of CEMEX

History• Founded with the opening of Cementos Hidalgo, in 1906

• Cementos Portland Monterrey began operations in 1920, and in 1931, the two companies merged, becoming Cementos Mexicanos, now CEMEX

• In the 1960s, CEMEX grew significantly when it acquired several more plants throughout Mexico

• In 1976, became the largest cement producer in Mexico with the purchase of three plants from Cementos Guadalajara

• Further acquisitions of Mexican cement companies were made in 1987 and 1989, making CEMEX one of the ten largest cement companies in the world

How Cemex Makes Cement

Imperatives to Globalise

• Growth Imperative• Globalisation of Competitors

A framework of choice of markets

Phased in Entry

Ignore for now

Rapid Entry

Opportunistic entry

Strategic Importance of Market

Firm’s Ability to Exploit Market

HighLow

High

Low

Alternative Modes of Entry100 %

100 %Exports

100 %Local Production

0 %

Degree of ownership control over activities performed in foreign market

CEMEX

Greenfield versus cross border acquisition

Greenfield Operations or Cross-Border Acquisition

Cross-Border Acquisition

Greenfield Operations

Greenfield operations or cross-border acquisition

HighLow

Uniqueness of Corporate Culture

HighGrowth

Mature or Declining

Market Growth Rate

Cost Structure of Asian Exports to US

Expansion Process

• Opportunity Identification– Country had to have large population– High Population growth as well as relatively low

level of current consumption– Want to lead market, or atleast 25% of it– Emerging countries– Quantitative – 65% – Qualitative – 35% (for example Political Risks)

Expansion Process

• Due Deligence– Target Identification– Formation of Team, was briefed the target

company & standards were set for assesment– Negotiations with the Govt. continued through

Due diligence.– Meeting with competitors– Final Output from the due diligence process was a

standardised report.

Expansion Process

• Post – Merger Integration (PMI) process– Formation of PMI team.– Improve efficiency of the newly obtained &

multinational over time.

Framework of Acquisition Analyses

CEMEX’s International ExpansionYear Events

1985 GATT Signed; Cemex began to concentrate on Cement and divests other business lines1987 Acquired Cementos Anahuac in Mexico1989 Acquired Cementos Tolteca; become Mexico largest producer and one of ten largest

worldwide

1992 Acquired Valenciana and Sanson in Spain; become world’s 5th largest cement producer1993-1994 Acquired 0.7 mt of capacity in Jamaica, 0.4 mt in Barbados, 0.7 mt in Trinidad & Tobago1994 Acquired Vencemos in Venezuela, Cemento Bayano in Panama and Balcones plant in texas

1995 Acquired Cementos Nacionales in Dominician Republic1996 Acquired a majority stake in Colombia’s cementos Diamante; become 3rd Largest Cement

Company

1997 Acquired 30% stake in Rizal Cement Company in the Philippines1998-1999 Acquired a 20% interest in PT Semen Gresik in Indonesia; acquired an additional 40% of Rizal,

and 99.9% of APO cement corp, also in the Philippines

1999 Acquired Assiut in Egypt, a 12% stake in Bio Bio in Chile, and cement del Pacifico in Costa Rica

2000 Announced availability of $1.175 billion for global acquisitions during the course of the year (39% more than 1999 spending)

Outlook

• Faced numerous issues in 2000, the major was the competition.

• Entry in Indonesia & Egypt, stirred some concerns about the Language barrier

• Lafarge’s hostile bid for Blue Circle appeared to have failed which resulted in consolidation at a new level of international competitors.

Thanks