Early reaction from Rinker Chairman John Morschel to Cemex's $13/share takeover bid suggests his board will formally recommend shareholders reject the unsolicited Oct. 27 offer. Cemex notes that the all-cash deal, totaling about $12.8 billion, values Rinker at a 27% premium over its Oct. 27 opening share price and 26.2% above Rinker shares' three-month volume weighted average. Rinker lists on the New York Stock Exchange in American depository receipts (ADR), each representing five shares as traded on the company's home exchange in Australia. The Cemex offer is equivalent to $65/ADR, although Oct. 30 trading closed above $71/ADR. The stock peaked in May 2006 at $83, dropping to $46 in mid-September.

A Rinker takeover would position Cemex ahead of Lafarge Group and CRH Plc as the world's largest heavy building materials operator, with annual sales of approximately $23.2 billion, and as an unrivaled North American power with U.S. ready mixed and aggregate production alone of 42 million to 47 million yd. and perhaps 150 million tons, respectively. Much like the RMC Group and RMC USA Inc. properties Cemex acquired in 2005, Rinker Group's lead franchise, Rinker Materials Corp., presents the suitor a host of strong regional properties with zero or limited overlap of existing businesses — excepting a handful of Florida and Arizona markets. Rinker Materials' coast-to-coast manufactured concrete operations — accounting for 3.8 million tons of pipe and precast and 150 million-plus concrete block annually — far surpass similar properties Cemex inherited from RMC USA.

“Cemex has a proven track record of disciplined acquisitions and successful integrations,” said Cemex Chairman and CEO Lorenzo Zambrano. “Combining Rinker with Cemex will generate value for the shareholders of both companies. Rinker's strong presence in key U.S. regions, which complements our existing operations, will significantly strengthen our ability to serve customers in the world's largest and most dynamic building materials market. At the same time, Rinker's attractive position in Australia extends our global network into an exciting new market.”

Cemex projects annual pre-tax cost synergies of $130 million by the third year following the proposed acquisition, primarily from sharing of best practices and standardized business processes. The transaction is subject to customary closing conditions, including acquisition of more than 90% of Rinker shares, and approval by Australian and U.S. regulators and Cemex shareholders.

Rinker Chairman John Morschel reiterated his characterization of the takeover bid from Cemex as hostile and one that materially undervalues Rinker. He said shareholders would receive a Bidder's Statement from Cemex to be followed by a Target Statement with formal Rinker board recommendation. “We are actively reviewing all of our options,” Morschel noted in a brief presentation, urging shareholders to take no action on the Cemex offer until the Rinker board issues a formal recommendation. In the weeks prior to Cemex's bid, Rinker's New York Stock Exchange-traded American depository receipts have remained in the $71-$72 range, climbing to that level immediately upon Cemex's $65/ADR bid.