RIN rinker group limited

cemex offers 17.00 for rinker

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    CEMEX OFFERS TO ACQUIRE AUSTRALIA'S RINKER GROUP FOR $12.8 BILLION

    CEMEX Offers to Acquire Rinker for US$12.8 Billion

    MONTERREY, Mexico, Oct 27, 2006 (BUSINESS WIRE) -- CEMEX, S.A.B. de C. V. ("CEMEX") today announced that it intends to make an offer to acquire all of the outstanding shares of Rinker Group Limited ("Rinker") (ASX: RIN, NYSE ADR: RIN) for US$13.00 per share, equivalent to A$17.00(1) per share, in cash. The offer represents a 26.2% premium over the three month volume weighted average price of Rinker's shares and a premium of 27.0% over its closing price(2) on the Australian Stock Exchange on October 27, 2006. This represents a multiple of 9.2 times Rinker's EBITDA in the twelve months to the last reported quarter, June 30, 2006. The total enterprise value of the transaction, including Rinker's debt, is approximately US$12.8 billion, equivalent to A$16.8 billion(1).
    The combination of CEMEX and Rinker will create one of the world's largest and most profitable building materials companies with pro forma revenues of US$23.2 billion and more than 67,000 employees in more than 50 countries.
    Lorenzo H. Zambrano, Chairman and CEO of CEMEX, said, "Combining Rinker with CEMEX will generate value for the shareholders of both companies. Rinker's strong presence in key regions of the U.S., which complements our existing U.S. 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 CEMEX's global network into an exciting new market.
    "Our offer provides full and fair value to Rinker shareholders and makes good strategic and financial sense for CEMEX. The complementary nature of the two businesses uniquely positions us to unlock Rinker's inherent value, which is reflected in the substantial premium that we are offering Rinker's shareholders.
    "CEMEX has a proven track record of disciplined acquisitions and successful integrations. The acquisition of Rinker meets our strict investment criteria and will further reduce the volatility of CEMEX's cash flow and our cost of capital."
    CEMEX expects to achieve approximately US$130 million pre-tax of annual cost synergies by the third year following the acquisition of Rinker, primarily from the sharing of best practices and the implementation of CEMEX's standardized business processes throughout the combined company.
    "We expect this transaction to be immediately accretive to free cash flow and to cash earnings per share", Mr. Zambrano said. "We are committed to restoring our financial flexibility, as measured by reducing the ratio of net debt to EBITDA, to no more than 2.7 within two years. We did this after Southdown and after RMC, and we will do so after this transaction."
    The transaction is subject to customary closing conditions, including the acquisition of more than 90% of Rinker shares, Australian and U.S. regulatory approval and approval by CEMEX shareholders. The offer is also for all outstanding American depositary shares of Rinker (NYSE ADR: RIN) for US$65.00 per American depositary share in cash. Each Rinker American depositary share represents a beneficial interest in five shares of Rinker. A summary of the conditions to the Offer is attached in Appendix A.
    CEMEX has obtained committed facilities, sufficient to satisfy in full the cash consideration payable to Rinker shareholders under the terms of the offer.
    CEMEX's offer is being made in U.S. Dollars, consistent with Rinker's reporting currency and reflecting the location of the vast majority of its assets. Rinker's shareholders will be given the opportunity to elect to receive their offer consideration in Australian Dollars, converted at the exchange rate prevailing at the time of payment.
    Citigroup is acting as lead financial advisor to CEMEX and JP Morgan is acting as co-financial advisor. Allens Arthur Robinson and Cravath, Swaine & Moore LLP are acting as legal counsel to CEMEX in relation to the offer.
 
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