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Cemex acquisition of Trinidad Cement a battle brewing

By John Collins (1)

National pride results in counter offer by local business people develops and unions, Barbados government oppose Mexican move.

PORT OF SPAIN, Trinidad – The move by Cemex, the giant Mexican producer, to acquire the Trinidad Cement Ltd. (TCL) (CB July 4), has led to a battle royal in the twin-island nation of Trinidad & Tobago T&T) as well as in the region.

While there are strong of elements of support for the Cemex acquisition in the country’s private sector, it has also resulted in a nationalistic backlash in the young nation which only became independent of Great Britain in 1962. The cement company, originally set up by Portland Cement under British rule, later became wholly owned by local interests.

Opponents of the Cemex acquisition fear the Mexican giant wants to purchase TCL to eliminate it as a competitor and expand its domination of the cement market throughout the Caribbean following earlier acquisitions in the Dominican Republic, Panama, Puerto Rico and  Venezuela. Some view TCL almost as national patrimony and the union, representing its 300 workers, worry they’ll be out of jobs if their plants are closed.

Supporters of the Mexican move view it as a step in the right direction for T&T as it adjusts to globalization and a world of fast trade. T government supports the Mexican acquisition although it is expected to become a big campaign issue in the forthcoming general elections which must be called by October. The country’s private sector is divided. The situation is further complicated by the fact that TCL controls subsidiary plants in Barbados and Jamaica and a distribution center in Anguilla.

“The government has no basis for intervening to stop the sale,” said T&T Prime Minister Patrick Manning.

A consortium of prominent local businesspeople have made a counteroffer to rival Cemex’s takeover bid. Among them is Harricrete Ltd. Which was involved in a bitter trade war with TCL a few years ago.

Cemex insists it will not close any of the three TCL plants nor let go any of the 300 workers.

“Cemex has a history of buying up entities and then shutting them down,” announced the president of the union representing the TCL workers. “We are not going to take the lip service they are giving today about job security and talking to the unions.”

Barbados plant also involved

In neighboring Barbados a consortium of businesspeople are also trying to prevent the acquisition because they want Arawak Cement in Barbados, a TCL subsidiary, from falling into the hands of Cemex.

TCL also owns Carib Cement in Jamaica. This is the second attempt by Cemex to takeover TCL after an earlier attempt in February.

Another complicating factor is the fact that T&T law requires 25% of a firm to be locally owned. T&T Trade & Industry Minister Kenneth Valley said the government was not opposed to the Cemex move and that the government would not stand in its way. Later he said if he had TCL stock he “would be selling them all right now.”

Major TCL stockholders, like the Guardian Holdings and Neal & Massy groups, then stepped into the picture, criticizing the TCL management for “focusing on resisting the Cemex move.” They are concerned with the rights of 6,000 shareholders and want them to decide whether to entertain the bid and at what price.Then the TCL Board removed prominent businessman Arthur Lok Jack as a director and then another director Steve Bideshi, resigned.

The TCL Board has now retained JP Morgan Securities to advise them on the proposed Cemex buyout. A vote by the shareholders on the question is scheduled by July 29.

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1) Other articles by the well known Caribbean author John Collins can be read at: www.pymesdominicanas.com

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July 16, 2002

 

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