Cemex extends bid for Rinker again

Cemex extends bid for Rinker again
22 March 2007

Cemex SA has extended its US$11.7bn takeover bid for Rinker Group Ltd for the third time as the Mexican cement company waits for a key regulatory ruling and bets on continued weakness in the US construction market. 
The offer, which had been set to close at the end of this month, has now been extended until April 27 with the U.S. Justice Department expected to rule on the bid sometime next month after examining potential antitrust issues. 
Rinker, which makes the bulk of its profits in the U.S., has rejected the US$13 a share offer as too low while analysts have speculated it could become the target of a European building products company such as Holcim, Lafarge or Hanson.
Its shares ended Thursday at A$18.13 and have traded as high as A$21.44 since the Cemex bid was unveiled in October. The rising Australian dollar that reached 10 year highs against the U.S dollar this week has also left Rinker investors unimpressed, with the bid having a local currency value of just A$16.12. 
"Cemex’s bid is pitched at a worsening and deepening of the U.S. housing situation, which is still playing out," said Peter Arden, an analyst at Intersuisse in Melbourne. 
"It’s a cash bid and Cemex is hoping that there will be an equal or bigger whiplash effect on Rinker’s share price, bringing it down to a level where its bid looks more appealing," said Arden. 
Wall Street investment bank Bear Stearns said this week that Cemex could boost its offer 23% to A$80 per American Depositary Receipt, without diluting 2008 earnings. The October offer was pitched at A$65. 
"Cemex may look to raise its already-rich offer," Bear Stearns said. 
Analysts and investors believe Cemex can afford to pay more than A$20 a share, while an independent expert hired by Rinker has said the company is worth up to A$23 a share.
"Cemex is buying time because the U.S. housing market isn’t that well at the moment and it wants to see how investors react," said Pei-Wan Wong, an analyst at CommSec in Melbourne. 
Cemex is being advised by Citigroup, while Rinker has hired UBS on its defense. 
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