The major private-equity groups are preparing to enter the bidding for takeover target Rinker, an analyst’s report claims.
The move comes as the besieged building materials group’s hostile takeover battle with Mexican cement giant Cemex enters its sixth month.
Rinker management’s rejection of the $A16.50-a-share offer was further vindicated by the price-earnings ratio paid in a recent similar international deal that shows Cemex may have to lift its bid to $20 a share.
Rinker chief executive David Clarke previously said the Cemex bid is "far too low".
In a depressed market, investors yesterday increased the Rinker share price by 37c to $19.05 following a report from Credit Suisse that said the deal validated an independent expert’s valuation.
The Credit Suisse report says Cemex’s bid for Rinker needed to lifted "above and beyond" $20 a share to achieve success.
"The longer this process goes, the greater the likelihood private equity features in any Rinker alternative," Credit Suisse research analyst Rohan Gallagher said.
The report follows Canadian cement group Holcim’s $620 million purchase of another cement group at 18.3 times price-earnings ratio.
If a similar p/e ration were applied for Rinker, the bid price would be $19.28 a share - valuing Rinker at $17.3bn.
A report from independent expert Grant Samuel included in Rinker’s target’s statement as part of the defence against Cemex put a fair price at between $20.58 and $23.04 a share.
Since the Cemex bid was first tabled in October, Rinker has spent about $100 million on five bolt-on acquisitions in the U.S.