Cemex to buy Rinker

[concretelew]

Just read this in " Concrete Currents" Wow this could big...
Cemex bid forces fast-track Rinker valuation
Sources: Rinker Group, Sydney; Cemex S.A.B., Monterrey, Mexico; CP staff
Early reaction from Rinker Chairman John Morschel to Cemex's $13/share takeover bid suggests his board will formally recommend shareholders reject the unsolicited Oct. 27 offer. Cemex notes that the all-cash deal, totaling about $12.8 billion, values Rinker at a 27 percent premium over its Oct. 27 opening share price and 26.2 percent above Rinker shares' three-month volume weighted average. Rinker lists on the New York Stock Exchange in American depository receipts (ADR), each representing five shares as traded on the company's home exchange in Australia. The Cemex offer is equivalent to $65/ADR, although Oct. 30 trading closed above $71/ADR. The stock peaked in May 2006 at $83, dropping to $46 in mid-September.

A Rinker takeover would position Cemex ahead of Lafarge Group and CRH Plc as the world's largest heavy building materials operator, with annual sales of approximately $23.2 billion, and as an unrivaled North American power with U.S. ready mixed and aggregate production alone of 42 million to 47 million yd. and perhaps 150 million tons, respectively. Much like the RMC Group and RMC USA Inc. properties Cemex acquired in 2005, Rinker Group's lead franchise, Rinker Materials Corp., presents the suitor a host of strong regional properties with zero or limited overlap of existing businesses -- excepting a handful of Florida and Arizona markets. Rinker Materials' coast-to-coast manufactured concrete operations -- accounting for 3.8 million tons of pipe and precast and 150 million-plus concrete block annually -- far surpass similar properties Cemex inherited from RMC USA.

"Cemex has a proven track record of disciplined acquisitions and successful integrations," says Cemex Chairman and CEO Lorenzo Zambrano. "Combining Rinker with Cemex will generate value for the shareholders of both companies. Rinker's strong presence in key U.S. regions, which complements our existing operations, will significantly strengthen our ability to serve customers in the world's largest and most dynamic building materials market. At the same time, Rinker's attractive position in Australia extends our global network into an exciting new market."

Cemex projects annual pre-tax cost synergies of $130 million by the third year following the proposed acquisition, primarily from sharing of best practices and standardized business processes. The transaction is subject to customary closing conditions, including acquisition of more than 90 percent of Rinker shares, and approval by Australian and U.S. regulators and Cemex shareholders.

[concretelew]

Australia's Rinker Set To Fight Cemex Bid
Dow Jones
(adds company and analyst comments, background)

By Bill Lindsay Of DOW JONES NEWSWIRES

SYDNEY -(Dow Jones)- Mexico's Cemex S.A. (CX) Sunday said it wants to meet Rinker Group Ltd. (RIN.AU) executives to win their support for its US$13 billion takeover bid, the largest undertaken in the global building materials sector.

Analysts and fund managers, however, said Cemex has little chance of snaring control of Rinker and boosting its presence in the key U.S. market without improving its offer pitched at US$13 a share or A$17 equivalent.

Charlie Aitken, the head of trading at institutional broker Southern Cross Equities, said he will be shocked if Cemex wins Rinker with its current bid.

"This is one where the fund managers will fight it out, they will be looking for something closer to A$20 before they even consider selling," Aitken said, noting Rinker was at the offer price in early June.

Numerous European and U.S. rivals could also take a close look at Rinker, analysts said, heralding another bidding war in the Australian market that is already beset by multibillion dollar deals led by cashed-up private equity firms.

Of the top 20 Australian stocks, six including Rinker with a total value of A$ 64 billion have either received takeover bids or are tipped by analysts to be on the M&A list of rivals and private equity groups. If successful, the A$17 billion bid by Cemex will rank as the largest in Australian history, beating the A$14 billion takeover of Optus by Singapore Telecommunications in 2001.

Aware that its bid relies on the support of institutions that account for 75% of Rinker's share register, Cemex executive Juan Pablo San Agustin arrived in Sydney Sunday morning to start briefing investors as well as attempting to arrange a meeting with Rinker.

"We've already offered to have a meeting whenever they feel it's convenient," San Agustin told reporters, noting a brief courtesy call with Rinker chairman John Morschel Friday evening.

"We would like to engage with them and we would much prefer to be friendly or recommended," said San Agustin, the senior vice president of corporate strategic planning at Cemex who has been working on the bid for the last four to five months.

Alongside his advisers at Citigroup and JP Morgan , San Agustin Monday meets analysts and fund managers, in particular Rinker's largest shareholder Perpetual which has 10.5%. US funds giant Capital Group is the next biggest investor with a 6% holding.

The bid has a 90% minimum acceptance condition, pressuring Cemex to win board support or face the prospect of an investor holding out or retail shareholders taking their cue from directors and refusing to accept.

While Rinker described the offer as "hostile" soon after it was unveiled Friday, a Rinker spokeswoman Sunday said the board is "reviewing the proposal". It hasn't yet named advisers, but in the past has used UBS and ABN AMRO.

Rinker Became Target After April Slump

San Agustin wouldn't comment on whether the bid may be increased. It is pitched at A$17 a share compared with Friday's closing price of A$14.70 which included a late spike after the Wall Street Journal newspaper broke the news of the bid.

Rinker's American Depositary Receipts soared 33% Friday to close at US$71.10 compared with the US$65 offered by Cemex for each ADR.

Rinker, which generates around 80% of its sales in the U.S., has fallen as much as 43% from its late April record high of A$21.44 amid a slowing U.S. housing market.

The slump has sparked speculation that Rinker will become a takeover target rather than being able to pursue its own acquisition agenda.

San Agustin said Cemex opted to bid for Rinker ahead of Europe's Hanson Plc. ( HNS.LN) as "the complementarity of the assets of Rinker is much greater than with Hanson".

"And in the case of Hanson, we already have a large presence in the UK as they do," he said.

Describing the Cemex bid as an opening gambit, Aitken from Southern Cross said the Monterrey-based company may face a contested bid that could include Ireland's CRH PLC (CRH.DB).

Other companies that analysts have said might look at Rinker include Europe's Lafarge S.A. (12053.FR), Holcim Ltd. (HOLN.VX) and Hanson. Rinker could also seek partnerships with U.S. peers such as Martin Marietta (MLM) and Texas Industries (TXI).

"Rinker has got a wonderful footprit in America. I think we underestimate the strategic value of what Rinker has got," Aitken said.

However Merrill Lynch said in July that like Cemex, Lafarge and Holcim had their hands full integrating large acquisitions. The investment bank also said Hanson shares too much geographic and product overlap with Rinker and CRH did not make a good "strategic fit".

Craig James, chief economist at retail broker Commsec, said the Cemex bid will flush out any other potential buyers of Rinker.

"As to who those parties are you could always point the finger at private equity at the moment," James said

"The Cemex bid shows M&A activity is not just limited to certain sectors. We are seeing it right across the board now, there is still interest in Coles and you have got interest in insurance and media and now building materials," said James.

Rob Patterson , the managing director of Australian funds manager Argo Investments, said there is a "quite extraordinary level" of M&A activity in the local market now that could turn asset managers into mere cashboxes.

Argo, which holds Rinker shares, is "not keen to let things go". Patterson said Argo had been "quite happy to hold Coles Myer", which recently rejected an A$18.3 billion bid by a buyout group led by New York's Kohlberg Kravis Roberts & Co.

-By Bill Lindsay, Dow Jones Newswires; 61-2-8235-2956; bill.lindsay@ dowjones.com

-Edited by Ian Pemberton

(END) Dow Jones Newswires 10-29-060148ET Copyright (c) 2006 Dow Jones & Company, Inc.


Copyright (C) 2006 Dow Jones & Company, Inc. All Rights Reserved.
10/29/2006 01:48 ET

[slumpy]

Well what about St.Mary's buyin Cemex ?

[Mort]

I'm not sure about St. Mary's, but CRH from Ireland is buying a bunch of Cemex's US operations. Sounds like a heavy industry version of a house flip.

They could be called St. Mary's in some places. Oldcastle is their big name in the US.

[marc]

Yeah Cemex have finalised it all and what not, and one of the first trucks painted in the Cemex colors will be put in service on Monday.

[Mort]

Well, apparently, since I posted that one above, the CRH deal fell through, so who knows? When I come to work and the trucks are all a different color, that'll be that.

Its really too bad, because I think a bright red cab and a white drum is a good looking color combo, and that Cemex paint scheme is ugly by comparison.

[marc]

Yeah im in australia i dont work for readymix/cemex, they own a 49% stake in our plant and toll out of our yard (this is what ive been told). But apprently the cemex scheme is yellow white and grey, correct me if im wrong.

[Mort]

I think its white with a red and blue stripe on the drum.

[lafargeslave]

cemex runs here in atlanta behind the USA concrete name. USA bought up Allied, and is the trucking arm of cemex. their coming on strong. consolidation is the name of the game. very few small operations are going to survive in cities. fleet size is the big deal now around here. we used to win commercial bids reguardless of price becuase we had close to 300 trucks that could be called in to supply big pours. some of the condos are trying to pour 3 times a week. slabs in the morning, colunms at night. jack it up and repeat. we had a competitor that would put CODs on a list and would try and get to them 2,3 days later due to trying to keep up with the commercial pours. they want to see 10 trucks parked in line waitng to get to the pump or they complain about service. 120-140 yds per hour through the pump an hour. now with the USA-Allied buyout they have a better sized fleet.

[LEAD DOG]

OUR EMPLOYER HAS A DEEP WATER PORT AND STORAGE SILOS IN ST. PETE FLORIDA. HE HAS SOME KINDA DEAL WITH CEMEX TO STORE THEIR CEMENT....HAVE ANY OF YOU GUYS or GALS HAULED ANY CONCRETE MADE WITH CEMEX ? THE STUFF SMELLS LIKE GUNPOWDER ! I WAS TANK GUNNER IN THE USMC MANY MANY MANY MANY IONS AGO. BACK THEN WE USED TORPEX & CORDITE AS A PROPELLENT IN THE SHELLS. WHEN YOU ADD SUPER TO CEMEX CONCRETE, IT SMELLS LIKE TORPEX & CORDITE ! I DON'T KNOW...MAYBE I'M HAVIN' ONE OF MY 1960's FLASHBACKS ....JUST DON'T HAVE AN OPEN FLAME ROUND THE STUFF ! IT'S A FINER GRIND THAN ST. MARYS or even LaFARGE. THE STUFF ACTS LIKE TYPE 3 CEMENT . THE CUSTOMER BETTER HAVE HIS nuts WOUND TIGHT WHEN HE USES CEMEX TOO . THAT CONCRETE HITS THE GROUND SMOKIN' !

[bighorn]

is Cemex buying mid-western based IMI inc. (irving materials)i heard the rumors last year but thats it. nothing else.

[lafargeslave]

lafarge sold its block plants here to a local outfit that is actually owned by old castle. weird. saleman used to say they could sell block all day, eisier than concrete, but we got rid of them.