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Compact case
Case
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Reference no. IB32B
Published by: Stanford Business School
Originally published in: 2002
Version: 3 December 2002

Abstract

This is part of a case series. In June 1997, Lafarge needed to make an important investment decision. The Romanian government was privatizing its largest cement manufacturer, Romcim, welcoming bids starting at $200 million. The emerging markets of Eastern Europe were strategically important to Lafarge, which sought to diversify its revenue base away from the mature markets of Western Europe and North America. Romcim represented a unique opportunity, as it was located in the second-largest market in Eastern Europe, and was one of the largest state privatizations of a cement manufacturer to date. However, although Lafarge appreciated the benefits of the venture, such as substantial growth prospects and a unique export opportunity to the Mediterranean and Danube regions, the company remained wary of Romania’s economic uncertainty and the numerous operational challenges of integrating the company into Lafarge’s global organization. Yet bids were due in July to the Romanian State Ownership Fund (SOF). Having spent two years studying the Romanian market, Jean-Louis Touati, senior vice president of strategy and development, and his team now needed to decide whether to proceed with a bid for Romcim.
Location:
Industry:
Size:
83,000 employees, USD12.3 billion revenues
Other setting(s):
1997-2001

About

Abstract

This is part of a case series. In June 1997, Lafarge needed to make an important investment decision. The Romanian government was privatizing its largest cement manufacturer, Romcim, welcoming bids starting at $200 million. The emerging markets of Eastern Europe were strategically important to Lafarge, which sought to diversify its revenue base away from the mature markets of Western Europe and North America. Romcim represented a unique opportunity, as it was located in the second-largest market in Eastern Europe, and was one of the largest state privatizations of a cement manufacturer to date. However, although Lafarge appreciated the benefits of the venture, such as substantial growth prospects and a unique export opportunity to the Mediterranean and Danube regions, the company remained wary of Romania’s economic uncertainty and the numerous operational challenges of integrating the company into Lafarge’s global organization. Yet bids were due in July to the Romanian State Ownership Fund (SOF). Having spent two years studying the Romanian market, Jean-Louis Touati, senior vice president of strategy and development, and his team now needed to decide whether to proceed with a bid for Romcim.

Settings

Location:
Industry:
Size:
83,000 employees, USD12.3 billion revenues
Other setting(s):
1997-2001

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