Cemex offers $12.8 bn for Rinker Group

LONDON: Cemex SA, the world’s third-largest cement maker, said it will offer to buy Australian building-materials supplier Rinker Group for $12.8 bn.

Cemex, based in Monterrey, Mexico, bid $13 a share in cash for the Sydney-based company, it said in a Business Wire statement. Its valuation of the offer includes debt, the statement said.

Rinker, which was spun out of sugar and building materials group CSR in ’03, supplies concrete blocks, pipes and other building materials. It also sells gravel, cement and asphalt used in roads and bridges.

“Rinker’s strong presence in key regions of the US, which complements our existing US operations, will significantly strengthen our ability to serve customers in the world’s largest and most dynamic building materials market,” chairman Lorenzo Zambrano, 62, said in a statement.

The US accounts for about a third of Cemex’s sales. The combined companies would have more than 67,000 employees and $23 bn in revenue.

Cemex has reduced net debt by more than $2 bn from a high of $10.4 bn at the end of March ’05 to $8.1 bn at the end of June, giving it the financial flexibility to buy more companies. The company on March 1, ’05, paid $5.8 bn, for RMC, doubling its sales and expanding its presence to 22 new countries, including the UK, France, Germany, Croatia, the Czech Republic and Malaysia.

Cemex said it expects to generate $130m of pre-tax cost savings after the purchase. Cemex’s management squeezed $360m of annual cost-savings from the RMC purchase, beating the company’s own estimate of $200m.

“Combining Rinker with Cemex will generate value for the shareholders of both companies,” Zambrano said in the statement.Cemex’s shares fell 84 centavos, or 2.4% on Thursday, to 34.44 pesos ($3.2) in Mexico City trading.