Cyntia Barrera Diaz
August 20, 2008
MEXICO CITY (Reuters) - Mexican cement firm Cemex said on Wednesday it could turn to international arbitration to resolve a dispute with Venezuela's government, which seized the company's unit there in a nationalization drive.
"It's one of several (options)," Cemex chief financial officer Rodrigo Trevino told Reuters.
Venezuelan President Hugo Chavez took over plants owned by Cemex, the world's No. 3 cement maker, on Monday as part of his bid to run key industries in the South American oil-producing nation.
Cemex, unlike European rivals Holcim and Lafarge, did not strike an agreement to sell to the Chavez government and now faces an increasing possibility of losing all, or most, of its investment after 14 years in Venezuela.
Cemex was looking for $1.3 billion in compensation but Venezuela said the company would be lucky to get $400 million.
Despite Chavez's blow to the Mexican giant, analysts think the impact on the company's stock will be limited and short-lived.
Cemex shares ended flat at 20.92 pesos on Wednesday after losing 2.8 percent the previous session.
"We are maintaining our 'buy' recommendation and target price of 27 pesos for Cemex's shares," Banif Securities and Ixe brokerage said in a joint report.
"Although we see (the nationalization) as negative ... the impact of the lost EBITDA is not enough to change our recommendation," they added.
Analysts have estimated that the Venezuelan operations represent about 4 percent of Cemex's consolidated earnings before interest, tax, depreciation and amortization.
The Mexican government has urged Venezuela to keep negotiating with Cemex.
Cemex has operations in more than 50 countries but makes most of its revenue from its Mexican, U.S. and Spanish units.
(Reporting by Cyntia Barrera Diaz; editing by Gunna Dickson)