Venezuela formalizes takeover of Cemex facilities

Bloomberg News

Aug. 20, 2008, 11:31AM

Venezuela approved the "forced acquisition" of the shares and property of Cemex SAB's local unit, a day after the national guard, oil workers and Energy and Oil Minister Rafael Ramirez seized the facilities.

Petroleos de Venezuela SA, the state oil company, will take over the cement unit under a decree signed by President Hugo Chavez and published today in the official gazette, the formal record of government actions.

The decree formalizes state ownership of Cemex Venezuela SACA as part of Chavez's move to boost state ownership of the country's most productive industries. Negotiations continue on the takeover of the country's biggest steel mill and third- biggest bank.

Holcim Ltd. this week accepted $552 million and Lafarge SA received $267 million for majority stakes in their units. Mexico's Cemex and the Venezuelan government still disagree over a fair price. Finance Minister Ali Rodriguez said Tuesday that shares of the local unit, which trade on the Caracas stock exchange, are worth only $400 million, while the company is demanding $1.2 billion.

Cemex's Venezuelan unit would be worth $1 billion if the government valued it the same as it did Holcim's operations, about $224 per ton of annual production capacity, Nicolai Sebrell, an analyst with Morgan Stanley, wrote in a report Tuesday. The Mexican government Tuesday called for negotiations between Venezuela and Cemex to continue with "non- discriminatory treatment."

Cemex's Venezuela shares were halted at 71 centimos Tuesday, giving the unit a market value of 987.2 million bolivars ($459.7 million).

Cemex's American depositary receipts rose 21 cents, or 1 percent, to $20.86 at 11:13 a.m. in New York Stock Exchange composite trading. The shares have fallen 18 percent since Chavez announced the takeover on April 4.

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