Schmacko (93.87)

Wal-Mart to buy Chile's D+S; Cemex news

December 30, 2008 – Comments (1) | RELATED TICKERS: DYS , CX

Apparently while I was on vacation last week wal-mart made a tender offer to aquire D+S (DYS)shares and ADRs in an attempt to enter the Chilean market.  http://news.moneycentral.msn.com/ticker/article.aspx?Feed=OBR&Date=20081223&ID=9471150&Symbol=DYS

The US and Chile have a free trade agreement and Chile is a very stable country so the move makes sense for Wal Mart.  However the offer does have union workers at D+S worried due to Wal-Mart's general anti-union stance:

http://www.bloomberg.com/apps/news?pid=20601086&sid=atNoSGphsp3Q&refer=latin_america

The bid for ADRs is $24.48 per ADR.  Which is only 30cents or so below the current price.  I'm closing my outperform pick here at +32ish % above the S+P.  If the deal goes through there isn't much more upside, however if the union threats or inability to find financing somehow causes the deal to fall through the price will probably drop back down.  If the deal does fall through I might look back into picking DYS again.  I like chilean tocks and they tend to outperform a lot american stocks lately. 

In other Latin America news Bloomberg also has an interesting piece up about Cemex (CX).

http://www.bloomberg.com/apps/news?pid=20601086&sid=aDzNlyfNONHM&refer=latin_america

Cemex back in october had said it originally planned on raising prices of imported cement to America by $15 a ton.  With the construction, especially residential construction, still most likely to be crappy next year I don't see how rising prices into a lowering demand enviornment is a good idea.  Analysts predict that lower fuel costs may make Cemex reverse that idea and possibly lower cement prices.  Which would make sense but Cemex has a lot of debt maturing over the next three years including $6 billion next year that it needs to refinance.  Falling prices in it's main market and world wide tighter lending standards don't give me a lot of short to mid term confidence in this company.  The stock, while way down for the year, has more than doubled in the last month and I think it's time for a short term downward correction.