|
|
|
Add to Clippings
 |
Text Size |  |
SYDNEY: The building materials maker Rinker Group has rejected a $12 billion bid by the Mexican company Cemex as "far too low" and suggested a price almost 40 percent higher.
Rinker shares listed in Sydney climbed to more than 10 percent above the bid price Wednesday as the company said it had held talks with other industry players, whom it did not identify.
A takeover by Cemex, the world's third-biggest cement maker, would create the largest ready-mix concrete company and the largest aggregates maker in the world, although it would still trail Lafarge, based in France, and Holcim, based in Switzerland, in cement.
Rinker said Cemex was trying to take advantage of a slump in the Rinker share price that had resulted from a downturn in the U.S. housing market.
"Shareholders should not surrender their stake in a company that is generating excellent returns now and has excellent prospects," the Rinker chairman, John Morschel, said. "This bid is opportunistic and far too low."
Rinker said it had held preliminary talks with other industry players, an indication that it might be open to other offers, although analysts said the high values being ascribed to Rinker's U.S. assets in a report it had commissioned could make it hard for it to extract value from any rival deal.
"Is this rejection an invitation in disguise, whether it's an invitation to another overbidder to commit or an invitation to Cemex?" asked Simon Thackray, an analyst at ABN AMRO.
Cemex bid $13 a share last month in what would be the biggest takeover ever by a Mexican company. Rinker's shares traded above 21 Australian dollars, or $16, in April but then fell sharply on the weak residential construction outlook in its important U.S. markets.
David Clarke, the Rinker chief executive, played down the importance of the talks with other suitors.
"We have had very preliminary discussions with a lot of players in the industry, but they are just that, preliminary discussions," he said.
Morschel said an independent report commissioned by Rinker valued the company at 20.58 dollars to 23.04 dollars a share, 29 percent above the Cemex offer at the midpoint and 38 percent higher at the top.
Fund managers said the valuation appeared attractive.
"We've always said it needed to have a 20 in front it," said Rob Patterson, managing director of Argo Investments, which holds a 0.4 percent stake in Rinker. "I think we just wait and see."
The independent report, by the corporate adviser Grant Samuel, said its valuation of Rinker was equivalent to 10.4 to 11.6 times the median broker forecast for its 2006-7 earnings before interest, tax, depreciation and amortization, which is $1.44 billion.
Multiples for similar companies over the past 10 years have ranged from 8 to 10, but the industry has consolidated, and there is a recognition that assets like quarries are not renewable, Thackray of ABN AMRO said.
Rinker, which gets around 85 percent of its earnings from the United States, has said the Florida housing market is likely to bottom out in the next 6 to 12 months, but Cemex said it would take longer to turn around.
Clarke said a surprise increase announced Tuesday in sales of existing homes in October in the United States was another sign of hope for the sector.
Morschel declined to comment on whether the company would consider a capital return or share buyback, but said Rinker was reviewing all possibilities.
|
||||||||||
 |
||||||||||
|
||||||||||
E-Mail Article
Listen to Article
Printer-Friendly
3-Column Format
Translate
Share Article
