You can almost hear Venezuelan strongman Hugo Chavez singing the lyrics to Aretha Franklin's song "Respect." The dictator says he's willing to reopen negotiations with Mexican cement maker Cemex
Those talks he's willing to hold, you might recall, have to do with his stealing the Venezuelan assets of the cement company. He seized the company last week after the Motley Fool Stock Advisor and Global Gains selection rejected an offer of $650 million to relinquish a controlling interest to the state, a position it says is worth at least $1.3 billion. Chavez characterized Cemex's managers as "arrogant" for not going quietly into the night as French cement company LaFarge did (it got $267 million for it troubles) or Switzerland's Holcim (getting a $552 million payoff in return).
If nothing else, you've got to appreciate that Chavez at least is willing to pay for the companies he expropriates. Unlike, say Russia's Vladimir Putin, who trumps up tax and criminal charges against companies he wants and throws the executives into prison in Siberia. Ask former Yukos CEO Mikhail Khodorkovsky who languishes in a Russian gulag. Or the chief executive of the Russian-BP
Yet forcing someone to accept your terms at the point of a gun is no less theft. To date, Chavez has nationalized the telecommunications industry, electricity, and oil. Last year ExxonMobil
To justify his taking of Cemex's property, Chavez has engaged in a little trash talking on the side saying the cement maker didn't invest in the country, accused it of polluting it instead, and engaged in a ritual of price-gouging the people.
While the tough talk is undoubtedly a bid to keep the ultimate price it pays down, it's notable that Cemex may ultimately end up getting more than what was originally offered. Yet doing business with dictators -- whether in Caracas, Moscow, or Beijing -- is a bit like playing Russian roulette: You spin the chamber and hope the gun to your head doesn't go off.
Cemex's assets in Venezuela only amount to about 4% of its EBITDA, so it shouldn't cause much of an impact to operations, and if it can get a little bit more for them in the process, Chavez can finally give up his Rodney Dangerfield routine.
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