Cemex likely to raise $11.7 bn bid for Australia's Rinker
Cemex, the world’s third-largest cement maker, may raise its $11.7 billion hostile bid for Rinker Group after stopping short of saying it is its final offer, analysts said.
By Agencies |
SYDNEY: Cemex, the world’s third-largest cement maker, may raise its $11.7 billion hostile bid for Rinker Group after stopping short of saying it is its final offer, analysts said.
Cemex on Tuesday defended its $13 a share offer for Australia’s biggest building materials maker as ‘full and fair,’ rejecting Rinker’s claims that the bid may be 36% too low. Under Australian law, once a bid is declared final it can’t be raised.
“We anticipate Cemex management will sound out key shareholders as to what price is required to gain control,” said a Credit Suisse analyst. Its refusal to declare the bid final ‘suggests Cemex is not prepared to walk away at these levels.’
Hector Medina, executive vice-president of planning and finance at the Mexican company, arrived in Sydney to meet with Rinker shareholders. Cemex wants to buy the Australian rival because of its business in the US, which is focused on Florida, Arizona and Nevada, the fastest-growing states.
The deal would make it the world’s biggest cement maker. Monterrey, Mexico-based Cemex made its bid in US dollars, saying shareholders could choose to be paid in Australian dollars at the exchange rate prevailing at the time of settlement.
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“Cemex did not deny that it can pay a lot more” to acquire Rinker, chairman John Morschel said on Tuesday, reiterating that the bid was ‘far too low’ Cemex would have to pay at least A$20.5 a share to sway investors, Gallagher said.Matthew McNee, an analyst at Goldman Sachs JBWere in Melbourne, said it could raise its bid by as much as 20% to ‘around A$19 to A$20 a share.’
Cemex made the bid on October 27 after a six-month, 35% slump in Rinker’s stock, prompting Perpetual Investments to label the bid ‘opportunistic’ Perpetual is Rinker’s biggest investor with a stake large enough to block the takeover.
Rinker rejected the offer November 29, saying its advisor Grant Samuel & Associates valued the stock at as much as $17.74.
Chief executive officer David Clarke said the bid undervalued the prospects of a US housing recovery. He forecast demand in Florida, his biggest market, could start to improve in six months. Morschel said last week the company was in preliminary discussions with ``a lot of players in the industry’’ as it seeks to thwart the bid.
The company was probably in talks with possible bidders such as Holcim Ltd, the world’s second-largest cement maker, and Lafarge SA, the biggest building materials maker, Credit Suisse’s Gallagher said. It may also seek a merger with US-based Vulcan Materials Co or Texas Industries Inc, he said.
Rinker could also look for a tie-up with London-based Hanson Plc, the world’s biggest supplier of sand and gravel to the construction industry, according to Simon Thackray, an analyst at ABN Amro Holding NV in Sydney. "We would not expect Rinker to disclose any alternatives until discussions become more advanced," Gallagher said.
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