Cementos Argos in the U.S.: Go Big or Go Home?

In April 2011, Colombian group Cementos Argos had to decide on whether to double down its business in the U.S., amidst the U.S. cement industry’s lowest performance in 30 years. Argos— Colombia’s leading cement producer and one of the “jewels” of Grupo GEA, the country’s largest conglomerate— already was the Colombian economic group with the largest investment in the U.S. when José Alberto Vélez, Argos’ CEO, received an offer by Lafarge, the western world’s leading cement maker. The offer gave Argos the opportunity to acquire several of Lafarge’s assets in the U.S., including two large cement plants, a cement grinding station, rail and port terminals. It would not only be Argos’ major investment in the U.S. in terms of money, but it would also defy its strategy in the U.S. thoroughly —Argos’ U.S. acquirees had been operating with a high level of autonomy, which would not be possible when dealing with a major competitor. The case questions whether Argos should accept Lafarge’s offer, despite the poor results obtained in the U.S. market, or if it should focus on Central America and the Caribbean, where it already had a strong presence, and where short-term economic prospects in the segment were brighter. It also discusses if Argos should enforce the centralization and integration of its whole U.S. business, deploying its culture and processes on its acquirees.