Rinker acquires more quarries as Cemex bid lingers

Rinker acquires more quarries as Cemex bid lingers
20 March 2007

Rinker Group Ltd said it has acquired three hard rock quarries and two sand mines in the northeastern Australian state of Queensland from private interests for an undisclosed sum.  
The acquisitions, aimed at bolstering the group’s position as a supplier to construction industry in Australia’s fastest growing state, comes as a hostile US$11.7bn bid for the construction materials group by Mexican cement group  Cemex SA is showing signs of not succeeding.  
Rinker has rejected the bid, pitched at US$13 a share, as opportunistic and significantly undervaluing the company.  
Deutsche Bank said in a note to clients last month it believes Cemex’s strict acquisition criteria may preclude it from increasing its offer to be within the independent expert’s valuation range.  
The Mexican group said it wants to acquire Rinker to expand its presence in the US where the Australian company earns more than 80 pct of its income.  
The US Department of Justice is yet to rule on any anti-trust issues relating to Cemex’s offer.  
Rinker shares have consistently traded higher than the offer price on expectations that Cemex will raise its offer or a rival offer will surface.  
As well, analysts believe the group is well placed to ride out the downturn in the US housing sector as its activities are heavily weighted to the fastest growing states in the US including Florida and Arizona.  
They have an average price target of 19.83 aud on the stock which yesterday closed down 0.17 aud at 18.60 but has climbed 30 pct since Cemex’s bid in late October. 
On Feb 29, Rinker reported that third quarter to December net profit rose 13 pct year-on-year to 182 mln usd.  
Rinker chief executive David Clarke said the environment was challenging but margins and returns were enhanced across much of the business despite higher costs and lower volumes.  
"It puts us in a strong position as the US housing market begins to show signs of stabilizing," Clarke said at the time.  
But he added it is difficult to predict the short-term impact of the US housing slowdown in some markets.  
Published under Cement News