1. Evaluate CEMEX's acquisition strategies. Identify its strengths and weaknesses along with its fit for CEMEX.
2. Did CEMEX properly evaluate its acquisitions from a financial perspective. Explain your answer.
3. What strategies can you suggest for CEMEX to recover its market leadership position? Justify your answer.
This case traces the spiraling demise of CEMEX, a Mexican based company, due to its acquisition of the Rinker Group. The main focus of the case is on how the CEMEX, through a strategy of acquisitions, became the largest cement company to a present day highly indebted and risky company to invest in. CEMEX focused on expansion through acquisition, developed technology and attained optimization in operational efficiency. With a 3-point acquisition strategy and the CEMEX WAY in post merger activities, CEMEX had developed strategic expertise in successful integration. Post merger integration teams, comparative processes, implementation of best practices, and a specific 5 guideline approach poised CEMEX to make its largest acquisition-the Rinker Group. While Rinker Group met with CEMEX's scrutiny, Rinker, located in the US, became a victim of the economic crisis and a fall in cement demand which ultimately impacted CEMEX's financial stability. With a history of relying on free cash flow to pay off debts, paying a 27% premium for Rinker, and depreciations in currencies, the outlook became negative for CEMEX. With lowered credit ratings, divestitures, and numerous cost cutting measures, CEMEX still remains in need of financing and is relying heavily on the US economic recovery.