RMC takeover would transform Cemex into 20 million+ yd. U.S. ready mixed gigante

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In an acquisition described as both the largest ever undertaken by a Mexican company and the most expensive takeover in the global construction materials business, Monterrey's Cemex SA, the world's third-largest cement producer, has agreed to purchase U.K.-based ready mixed giant RMC Group Plc for $4.15 billion in cash. The proposed takeover would mark Cemex's entry into the Eastern European marketplace while substantially extending the reach of its North American operations. Including the assumption of debt, the value of the transaction, expected to close by year's end, is nearly $5.8 billion.

Most of RMC Group's annual sales are in the U.S. and Western European countries, like Germany and the United Kingdom, while Cemex's biggest markets cover all of the Americas, as well as Southeast Asia. RMC also has built a sizable Eastern Europe presence, with operations in Poland, the Czech Republic and Hungary. According to a September 27 announcement, the deal would double Cemex's 2003 revenue to the tune of $15 billion. “The acquisition is a very compelling strategic opportunity,” says Cemex Chairman Lorenzo Zambrano. “RMC's strong positions in cement, aggregates and ready mixed concrete will add to our existing operations in these areas. The combination further builds on our business model through greater vertical integration and creates opportunities in new markets for our cement products.”

While Cemex figures to keep most of the U.S. assets, Zambrano's comments seem to suggest that the company plans to streamline RMC operations outside of cement, aggregates and ready mixed. Atlanta-based RMC USA Inc. has regional pipe and precast businesses, along with block and paver plants in the Carolinas, Georgia and Florida. Following its 2000 acquisition of Southdown Inc., however, Cemex kept block plants that were tightly integrated in the deal's Florida concrete operations.

In terms of its gains on the U.S. cement side, Cemex adds RMC Pacific Materials, Inc.'s 875,000-tpy Santa Cruz Plant in Davenport, Calif., as well as two nearby terminals. Worldwide in 2003, RMC sold approximately 15.7 million tons of cement from its 60 plants and terminals, 55.5 million cubic meters of ready mixed, and 158 million tons of aggregates, generating revenues of $7.9 billion. Cemex expects to achieve approximately $200 million of annual synergies by 2007 as a result of the acquisition, mainly from centralizing management, trading network benefits, logistics, global procurement, energy and overall best practices. With 28,000 RMC employees added to its roster, Cemex will have its biggest challenge when it comes to streamlining the business, a process for which the company is well known and well practiced. Zambrano said that in an effort to discourage potential rival companies from making counteroffers, Cemex acquired 18 percent of RMC shares the day before the buyout was announced.

Cemex USA's 86 ready mixed plants are a combination of existing Texas, Arizona and southern California (Orange, Riverside counties) properties and former Southdown operations in Florida and southern California (Los Angeles, Orange counties). By Cement Americas estimates, RMC USA brings an additional 120-150 ready mixed plants in the Carolinas, Florida, Georgia, Texas, New Mexico, Nevada, Arizona and northern California. If the takeover succeeds without regulatory stipulations for any Florida and Arizona overlap, Cemex USA would become the nation's largest ready mixed producer with estimated annual output between 18 million and 21 million yd.

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Portland Cement NESHAP: Potential Impact on Cement Industry
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This joint Cement Americas/Portland Cement Association (PCA) webinar addresses the proposed changes to the Environmental Protection Agency’s (EPA) portland cement national emission standards for hazardous air pollutants (NESHAP), and the potentially devastating impact these new standards may have on the cement and concrete industries.

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