The CEMEX way to profitable growth: Leveraging post-merger integration and best-practice innovation

On September 28, 2004, only a few months after completing a four year best practice sharing and standardization initiative called the “Cemex Way” and introduction of a new governance model, CEMEX announced its intent to acquire UK-based Ready Mix Concrete (RMC) group for US$5.8 billion. RMC was a company more than half CEMEX’s size, with a highly decentralized culture and operating style, spread across Europe, the United States, the Middle East, Asia-Pacific and Latin America. CEMEX knew that the post-merger integration (PMI) would be very challenging and that it would have to adapt its new governance structure and business operating model to this new reality. With synergies from the RMC integration still to be realized and several countries still to be integrated to the CEMEX Way, CEMEX made an unsolicited offer to buy the Rinker Group Ltd, a Sydney-based maker of ready-mix concrete, aggregates and cement with operations in Australia and the US, for $14.2 billion – CEMEX’s largest acquisition to date! The back to back acquisitions strained the company’s management discipline, culture, global business model and, most importantly, its people beyond their limits. Discussions in the case revolve around how CEMEX could manage the PMI of both RMC and Rinker to meet market expectations of “cost synergies” and still grow its top line? And, more importantly, how the company, which now employed close to 67,000 people spread across 54 countries, could evolve its people culture, sustain its management discipline for execution, refresh its business processes and IT systems with innovations and best practices, and retain the financial flexibility for future acquisitions in the cement industry?

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