Poor outlook key to Rinker takeover

The storm clouds surrounding building products maker Rinker Group’s profit outlook influenced the board’s decision to recommend rival Cemex’s takeover offer, according to a company briefing yesterday following the release of its annual results.

In what may be its last results announcement as a standalone company, Rinker reported a 5.7 per cent lift in net profit to US$782.4m (US$1.07bn) for the year ended March 31.

At the same time, the cement maker warned that its profit in the 2008 financial year could drop about 10 per cent if the company’s main United States housing markets stayed depressed.

In summary, this is a good result delivered in difficult circumstances but the outlook is mixed and the shape of the recovery is difficult to predict,’’ said Rinker chief executive David Clarke.

The Rinker board has recommended shareholders accept a A$17bn (US$19bn) takeover of the company by Cemex, which shareholders have until May 18 to accept.

In a briefing for market analysts, Rinker chairman John Morschel defended the board’s decision to recommend Cemex’s A$15.85 offer to shareholders.

The independent expert ... has basically confirmed that the offer provided by Cemex is the bottom end of the range of valuations,’’ he conceded. What we’re really saying is that in the absence of the Cemex bid the share price is likely to fall ... Don’t forget, the share price was below A$13 not too long ago.’’