Rinker's largest shareholder accepts Cemex bid
May, 08 2007
(SYDNEY, Australia) - Cemex's $14.2 billion bid for Rinker Group was accepted by the Australian building-materials maker's largest shareholder, removing the biggest hurdle to the six-month-old deal.
Perpetual, which holds a 10.5 percent stake in Rinker, said that it would accept the $15.85 a share cash bid "as soon as practicable." Rinker shares gained 1.8 percent to 19.23 Australian dollars in Sydney, rising to the offer price based on Monday's exchange rate.
The approval comes as Monterrey, Mexico-based Cemex extended its bid for a further three weeks and scrapped a condition that the takeover needed 90 percent of acceptances in order to succeed. Rinker's board backed the deal, the biggest-ever takeover in the global building-materials industry, after Cemex raised its offer by 22 percent last month.
"We'll probably see acceptances accelerate now," said Simon Thackray, an analyst at ABN AMRO in Sydney. Perpetual's decision to back the takeover means "the removal of the key blocking stake," he said.
Shareholders also have the option of receiving 19.50 dollars a share for a maximum of 2,000 shares after the Australian currency's gain against the U.S. dollar cut the value of the bid.
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Cemex, the world's third-largest cement producer, wants to buy Rinker to raise annual sales by 32 percent to $24 billion and add plants in Florida, Arizona and Nevada, the American states with the fastest-growing populations. Juan Pablo San Agustin, Cemex's senior vice president of corporate strategic planning, flew to Sydney last week to sway investors, including Perpetual.
The offer seemed in doubt after Rinker reported better-than-expected earnings on April 30 and said that profit in the current year may fall less than 10 percent, as the company counters a housing slump in the world's largest economy with road and infrastructure work.
"Given the outlook isn't as bad as some might have expected, the board's recommendation of the Cemex bid is likely to come into question," Andrew Dale, an analyst at Macquarie Bank, wrote in an April 30 note to clients.
John Sevior, head of Australian equities at Perpetual in Sydney, could not be reached to comment on his decision.
Perpetual's approval may break a string of derailed takeovers in Australia. A Macquarie Bank-led 11.1 billion dollar buyout offer for Qantas Airways, the country's biggest airline, failed over the weekend because bidders could not get the 50 percent stake required for the deal in time.
A 1.6 billion dollar buyout of Flight Centre, Australia's biggest travel agent, was blocked by Lazard Asset Management in February.
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