CEMEX, S.A.B. DE C.V. 
By One of the world's biggest cement companies, Cemex went on a massive, poorly timed shopping spree just before the last financial crisis. It shelled out $16 billion (9.6 billion pounds) to buy Australian peer Rinker, leaving it neck-deep in debt and poorly positioned when the U.S. housing market collapsed.
Cemex came close to defaulting and its share price plunged before it went through painful refinancings that have put it back on its feet but capped its spending.
That cap could now be a strait-jacket preventing Cemex from spending big as Holcim and Lafarge look to sell off 5 billion euros(4.12 billion pounds) in assets in order to win approval for a merger that would create the world's biggest cement company.
"We don't see Cemex being able to buy something. Its level of leverage is something that blocks it," said Fernando Bolanos, an analyst at Mexican brokerage Monex. "Nor do we see it as a buy-out target."
Cemex had $16.3 billion in net debt at the end of 2013 and a ratio of net debt to earnings before interest, taxes, depreciation and amortization (EBITDA) of 6.2, well above the industry average, as well as limited cash flow.
Under a 2012 debt refinancing covenant, Cemex must use cash flow to pay down debt, restricting what it can buy.
High debt leverage means Cemex's credit ratings lie four levels below investment grade, which it hopes to regain in 2016.
However, the fact that Holcim and Lafarge will be forced to sell assets could apply downward pressure on asset prices, giving Cemex a shot at smaller purchases helping it to grow in slowly-improving foreign markets.
Cemex shares surged last Friday on the news that Holcim and Lafarge were in advanced merger talks as investors bet that industry consolidation would help underpin cement prices, but they fell 2.33 percent on Monday to 17.22 pesos.
Cemex executives have not yet commented on the merger deal between the two European companies, which would create a giant with a market value of close to $60 billion and $44 billion in annual sales.
Industry experts said it would probably take two years for the merger to gain global approval given that governments are often major customers of cement companies as well as sector regulators.
A debt restructuring and a pickup in the U.S. construction industry have helped improve Cemex's results, and its share price, but the company is not expected to pay down much debt any time soon.
"Cemex's net debt is not projected to change materially in the next two years despite the projected upturn in EBITDA due to rising working capital needs associated with growth, increasing capex, and higher taxes," rating agency Fitch said in a report last month.
Two-thirds of the divestments planned by LafargeHolcim are expected to affect Western Europe, but the companies' operations also overlap in Brazil, Canada, China and India, Lafarge Chief Executive Officer Bruno Lafont said.
One consultant who has worked on Cemex debt refinancing projects said he expected the company to look at assets in Brazil and Canada, and to shy away from Asian markets.
In the United States, where Cemex already has a strong presence, it could use its stake in Mexico's Grupo Cementos de Chihuahua as an investment vehicle to get around its spending cap, the consultant said.
Cemex's fourth-quarter loss narrowed to $255 million from $494 million a year earlier as it hiked prices and cement sales picked up in the United States and Europe.
However a sagging construction sector at home in Mexico, which accounts for around a fifth of Cemex's total sales, dragged Mexican net sales 6 percent lower during the quarter.
Holcim and Cemex announced plans in August to exchange some assets and combine others in Europe, seeking cost savings in response to tough conditions in the construction sector. The deal has already come under regulator scrutiny and its fate is unclear.
Chief Executive Lorenzo Zambrano told a shareholder meeting in March that Cemex is always on the lookout for opportunities.
"We think there are some areas in Southeast Asia where we could take part and some markets have been growing fast like Philippines and Colombia, and we are investing there," he said.
(Additional reporting by Elinor Comlay; Writing by Simon Gardner; Editing by Kieran Murray)
By Gabriela Lopez and Gabriel Stargardter
