CEMEX, S.A.B. de C. V. ("CEMEX") (NYSE: CX) today announced that
it intends to make an offer to acquire all of the outstanding shares
of Rinker Group Limited ("Rinker") (ASX: RIN, NYSE ADR: RIN) for
US$13.00 per share, equivalent to A$17.00(1) per share, in cash. The
offer represents a 26.2% premium over the three month volume weighted
average price of Rinker's shares and a premium of 27.0% over its
closing price(2) on the Australian Stock Exchange on October 27, 2006.
This represents a multiple of 9.2 times Rinker's EBITDA in the twelve
months to the last reported quarter, June 30, 2006. The total
enterprise value of the transaction, including Rinker's debt, is
approximately US$12.8 billion, equivalent to A$16.8 billion(1).
The combination of CEMEX and Rinker will create one of the world's
largest and most profitable building materials companies with pro
forma revenues of US$23.2 billion and more than 67,000 employees in
more than 50 countries.
Lorenzo H. Zambrano, Chairman and CEO of CEMEX, said, "Combining
Rinker with CEMEX will generate value for the shareholders of both
companies. Rinker's strong presence in key regions of the U.S., which
complements our existing U.S. 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 CEMEX's global network into
an exciting new market.
"Our offer provides full and fair value to Rinker shareholders and
makes good strategic and financial sense for CEMEX. The complementary
nature of the two businesses uniquely positions us to unlock Rinker's
inherent value, which is reflected in the substantial premium that we
are offering Rinker's shareholders.
"CEMEX has a proven track record of disciplined acquisitions and
successful integrations. The acquisition of Rinker meets our strict
investment criteria and will further reduce the volatility of CEMEX's
cash flow and our cost of capital."
CEMEX expects to achieve approximately US$130 million pre-tax of
annual cost synergies by the third year following the acquisition of
Rinker, primarily from the sharing of best practices and the
implementation of CEMEX's standardized business processes throughout
the combined company.
"We expect this transaction to be immediately accretive to free
cash flow and to cash earnings per share", Mr. Zambrano said. "We are
committed to restoring our financial flexibility, as measured by
reducing the ratio of net debt to EBITDA, to no more than 2.7 within
two years. We did this after Southdown and after RMC, and we will do
so after this transaction."
The transaction is subject to customary closing conditions,
including the acquisition of more than 90% of Rinker shares,
Australian and U.S. regulatory approval and approval by CEMEX
shareholders. The offer is also for all outstanding American
depositary shares of Rinker (NYSE ADR: RIN) for US$65.00 per American
depositary share in cash. Each Rinker American depositary share
represents a beneficial interest in five shares of Rinker. A summary
of the conditions to the Offer is attached in Appendix A.
CEMEX has obtained committed facilities, sufficient to satisfy in
full the cash consideration payable to Rinker shareholders under the
terms of the offer.
CEMEX's offer is being made in U.S. Dollars, consistent with
Rinker's reporting currency and reflecting the location of the vast
majority of its assets. Rinker's shareholders will be given the
opportunity to elect to receive their offer consideration in
Australian Dollars, converted at the exchange rate prevailing at the
time of payment.
Citigroup is acting as lead financial advisor to CEMEX and JP
Morgan is acting as co-financial advisor. Allens Arthur Robinson and
Cravath, Swaine & Moore LLP are acting as legal counsel to CEMEX in
relation to the offer.
Webcast and presentations
A webcast presentation will be accessible live at 10:00 AM U.S.
EST. You may access the live presentation at www.cemex.com, or you may
access the audio-only conference call by dialing +1 617-614-3473 and
entering the passcode 96960039.
A recording of the webcast and the conference call will be
available from 1:00 PM U.S. EST on October 27 (3:00 AM Sydney time on
October 28). You may access the webcast recording at www.cemex.com, or
by dialing +1 617-801-6888. The recording passcode is 90642654.
CEMEX is a growing global building solutions company that provides
high quality products and reliable service to customers and
communities in more than 50 countries throughout the world.
Commemorating its 100th anniversary in 2006, CEMEX has a rich history
of improving the well-being of those it serves through its efforts to
pursue innovative industry solutions and efficiency advancements and
to promote a sustainable future. For more information, visit
www.cemex.com.
The Bidder's Statement will be lodged with the Australian
Securities and Investments Commission, the Australian Stock Exchange,
the Mexican Stock Exchange and Mexican Stock Market Authorities
shortly. When the Bidder's Statement is sent to Rinker's shareholders,
it will be filed with the United States Securities and Exchange
Commission (the "Commission").
Investors and security holders are urged to read the Bidder's
Statement from CEMEX Australia Pty Ltd ("Bidder") regarding the
proposed Offer described above, when it becomes available, as it will
contain important information. Once filed in the United States with
the Commission, the Bidder's Statement will be available on the
Commission's web site. Investors and security holders may obtain a
free copy of the Bidder's Statement (when it is available) and other
documents filed by Bidder with the Commission on the Commission's web
site at www.sec.gov. The Bidder's Statement and these other documents
may also be obtained for free from Bidder, when they become available,
by directing a request to the CEMEX Offer Information Line on 1300 721
344 (within Australia) or 1 (866) 244 -1296 (toll free within the
United States).
This document includes "forward-looking statements." These
statements contain the words "anticipate", "believe", "intend",
"estimate", "expect" and words of similar meaning. All statements
other than statements of historical facts included in this document,
including, without limitation, those regarding CEMEX's financial
position, business strategy, plans and objectives of management for
future operations (including development plans and objectives relating
to CEMEX's products and services) are forward-looking statements. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors that could cause the actual
results, performance or achievements of CEMEX to be materially
different from future results, performance or achievements expressed
or implied by such forward-looking statements. Such forward-looking
statements are based on numerous assumptions regarding CEMEX's
operations and present and future business strategies and the
environment in which CEMEX will operate in the future. These
forward-looking statements speak only as of the date of this document.
Accordingly, there can be no assurance that such statements, estimates
or projections will be realized. None of the projections or
assumptions in this document should be taken as forecasts or promises
nor should they be taken as implying any indication, assurance or
guarantee that the assumptions on which such projections have been
prepared are correct or exhaustive or, in the case of assumptions,
fully stated in this press release. CEMEX expressly disclaims any
obligation or undertaking to disseminate any updates or revisions to
any forward-looking information contained herein to reflect any change
in CEMEX's results or expectations with regard thereto or any change
in events, conditions or circumstances on which any such statement is
based, except as required by law. The projections and forecasts
included in the forward-looking statements herein were not prepared in
accordance with published guidelines of the American Institute of
Certified Public Accountants, the Commission or any similar body or
guidelines regarding projections and forecasts, nor have such
projections or forecasts been audited, examined or otherwise reviewed
by the independent auditors of the Company. You should not place undue
reliance on these forward-looking statements.
(1) Based on an exchange rate of A$1.00 to US$0.7645, as published
by the Reserve Bank of Australia as of October 27, 2006.
(2) Based on the last traded price of Rinker shares during normal
trading on Australian Stock Exchange.
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Appendix A
Conditions to Offer
For the purposes of the conditions set out below, unless the context
requires otherwise:
ADR means American depositary receipts which evidence the Rinker ADSs.
Announcement Date means 27 October 2006 (Sydney time).
Approval means:
(a) a consent, authority, licence, approval, order, ruling, waiver or
exemption which is required by law or by a Public Authority; or
(b) in relation to anything which will be fully or partly prohibited
or restricted by law if a Public Authority intervenes or acts in
any way within a specified period after lodgement, filing,
registration or notification, the expiry or termination of that
period without intervention or action.
ASIC means the Australian Securities and Investments Commission.
Bidder means CEMEX Australia Pty Ltd (ACN 122 401 405), a wholly-owned
indirect subsidiary of CEMEX.
Bidder's Statement means the statement of Bidder under Part 6.5 of the
Corporations Act relating to the Offer.
CEMEX means CEMEX, S.A.B. de C.V.
CEMEX Group means CEMEX and its Related Entities as at the date of the
Bidder's Statement.
Corporations Act means the Corporations Act 2001 (Cth).
Defeating Condition means each condition set out in paragraphs (a) to
(n) below.
FATA means the Foreign Acquisitions and Takeovers Act 1975 (Cth).
HSR Act means the United States Hart-Scott-Rodino Antitrust
Improvements Act of 1976.
Offer means, as the context requires, the offer for Rinker Securities
contained in the Bidder's Statement, or the off-market takeover bid
constituted by that offer and each other offer by Bidder for Rinker
Securities in the form of that offer, including in each case as varied
in accordance with the Corporations Act.
Offer Period means the period during which the Offer will remain open
for acceptance in accordance with its terms.
Public Authority means any government or any governmental,
semi-governmental, statutory or judicial entity or authority, or any
minister, department, office or delegate of any government, whether in
Australia, the United States or elsewhere. It also includes any
self-regulatory organisation established under statute and any stock
exchange.
Related Entity, in relation to an entity, means an entity which is a
related body corporate of that entity under section 50 of the
Corporations Act.
Rinker means Rinker Group Limited (ACN 003 433 118).
Rinker ADS means an American depositary share issued by JPMorgan Chase
Bank, N.A., in its capacity as the depositary of Rinker's American ADR
program, representing beneficial interests in five Rinker Shares.
Rinker ADSholder means a person registered as the holder of Rinker
ADSs in the ADR register maintained by JPMorgan Chase Bank, N.A., in
its capacity as the depositary of Rinker's ADR program.
Rinker Group means Rinker and its Related Entities as at the date of
the Bidder's Statement.
Rinker Securities means Rinker ADSs and Rinker Shares.
Rinker Securityholder means a Rinker ADSholder or Rinker Shareholder.
Rinker Shareholder means a person registered in the register of
members of Rinker as a holder of Rinker Shares.
Rinker Shares means fully paid ordinary shares in Rinker.
SEC means the United States Securities and Exchange Commission.
Treasurer means the Treasurer of the Commonwealth of Australia.
US Exchange Act means the United States Securities and Exchange Act of
1934.
The Offer will be subject to the following conditions:
(a) Minimum acceptance
At or before the end of the Offer Period, Bidder has relevant
interests in at least 90% of Rinker Shares.
(b) CEMEX shareholder approval
Before the end of the Offer Period, all resolutions necessary to
approve, effect and implement the Offer and the acquisition of
Rinker Securities by Bidder or any other CEMEX Group member are
passed by the requisite majority of CEMEX shareholders at a
general shareholders' meeting of CEMEX.
(c) Foreign investment approval - Australia
One of the following occurs before the end of the Offer Period:
(i) the Treasurer or his agent advises Bidder to the effect
that there are no objections to the acquisition of up to
all the Rinker Securities by Bidder (by any means
permitted by the Corporations Act) in terms of the
Commonwealth Government's foreign investment policy;
(ii) no order is made in relation to the Offer under section 22
of FATA within a period of 40 days after Bidder has
notified the Treasurer that it proposes to acquire Rinker
Securities under the Offer, and no notice is given by the
Treasurer to Bidder during that period to the effect that
there are any objections to the acquisition of the Rinker
Securities by Bidder (by any means permitted by the
Corporations Act) in terms of the Commonwealth
Government's foreign investment policy; or
(iii) where an order is made under section 22 of FATA, a period
of 90 days has expired after the order comes into
operation and no notice has been given by the Treasurer to
Bidder during that period to the effect that there are any
objections to the acquisition of the Rinker Securities by
Bidder (by any means permitted by the Corporations Act) in
terms of the Commonwealth Government's foreign investment
policy.
(d) Antitrust approvals - United States
Before the end of the Offer Period, all applicable waiting periods
(including any extensions) under the HSR Act shall have expired or
been otherwise terminated in respect of the Offer.
(e) Other regulatory approvals
Before the end of the Offer Period, Bidder receives all Approvals
(other than those referred to in paragraphs (c) and (d):
(i) that are necessary to permit the Offer to be lawfully made
to, and accepted by, Rinker Securityholders; or
(ii) that are required as a result of the Offer or the
successful acquisition of Rinker Securities and are
necessary for the continued operation of the business of
the Rinker Group, or of the CEMEX Group, substantially on
the same terms as the relevant business was conducted as
at the date of the Bidder's Statement, in each case on an
unconditional basis or on the basis of conditions that
impose only non-material requirements incidental to the
Approval, and, at the end of the Offer Period, all of
those Approvals remain in full force and effect in all
respects and are not subject to any notice or indication
of intention to revoke, suspend, restrict, modify or not
renew those Approvals.
(f) No regulatory actions
Between the Announcement Date and the end of the Offer Period:
(i) there is not in effect any preliminary or final decision,
order or decree issued by a Public Authority;
(ii) no action or investigation is announced, commenced or
threatened by any Public Authority; and
(iii) no application is made to any Public Authority (other than
by Bidder or any of its associates), in consequence of or
in connection with the Offer (other than an application
to, or a decision or order of, ASIC or Takeovers Panel for
the purpose, or in exercise, of the powers and discretions
conferred on it by the Corporations Act or SEC for the
purpose, or in exercise, of the powers and discretions
conferred on it by the US Exchange Act) which restrains or
prohibits or impedes, or threatens to restrain, prohibit
or impede, the making of the Offer or the acquisition of
Rinker Securities under the Offer or the completion of any
transaction contemplated by the Bidder's Statement, or
seeks to require the divestiture by Bidder of any Rinker
Securities, or the divestiture of any material assets of
the Rinker Group or the CEMEX Group.
(g) No material adverse change
Between the Announcement Date and the end of the Offer Period, no
event, change or condition occurs, is announced or becomes known to
Bidder (whether or not it becomes public) where that event, change or
condition has had, or could reasonably be expected to have, a material
adverse effect on:
(i) the business, assets, liabilities, financial or trading
position, profitability or prospects of the Rinker Group,
taken as a whole, since 31 March 2006; or
(ii) the status or terms of arrangements entered into by the
Rinker Group, or on the status or terms of any approvals,
licences or permits from Public Authorities applicable to
the Rinker Group, except for events, changes and
conditions publicly announced by Rinker or otherwise
disclosed in public filings by Rinker or any of its
subsidiaries prior to the Announcement Date where the
relevant disclosure is not, and is not likely to be,
incomplete, incorrect, untrue or misleading.
(h) No material mergers, acquisitions, disposals or new commitments
Between the Announcement Date and the end of the Offer Period, except
for any proposed transaction publicly announced by Rinker before the
Announcement Date, neither Rinker nor any subsidiary of Rinker:
(i) consolidates with or mergers with or into any other person
(other than, in the case of a subsidiary of Rinker, a
wholly-owned subsidiary of Rinker) or announces an
intention to do so;
(ii) acquires, offers to acquire or agrees to acquire one or
more entities, businesses or assets (or any interest in
one or more entities, businesses or assets) for an amount
in aggregate greater than US$200 million, or announces an
intention to do so;
(iii) disposes, offers to dispose or agrees to dispose of one or
more entities, businesses or assets (or any interest in
one or more entities, businesses or assets) for an amount,
or in respect of which the book value (as recorded in
Rinker's consolidated statement of financial position as
at 31 March 2006) is, in aggregate, greater than US$200
million, or announces an intention to do so;
(iv) enters, offers to enter or agrees to enter into any
transaction or becomes the subject of any obligation
which would require the expenditure, the foregoing of
revenue or may result in Rinker or any subsidiary of
Rinker incurring any actual or contingent liability of an
amount which is, in aggregate, more than US$200 million,
or announces its intention to do so; or
(v) enters, offers to enter or agrees to enter into, any
agreement, joint venture or partnership which is for a
term longer than two years, other than in the ordinary
course of business, or announces its intention to do so,
and during that period the business of the Rinker Group is otherwise
carried on in the ordinary and usual course of business.
(i) Change of control and other rights under certain agreements
No person has, or before the end of the Offer Period is granted, any
right (whether conditional or not) under any agreement or arrangement
which is material in the context of the business of the Rinker Group
(which includes any agreement or arrangement the termination of which
is likely to adversely affect the revenue or costs of the Rinker Group
by more than US$200 million per annum, or the assets or liabilities of
the Rinker Group by more than US$200 million), as a result of the
Bidder acquiring Rinker Securities, to:
(i) acquire, or require the disposal of, or require Rinker or
a subsidiary of Rinker to offer to dispose of, any
material asset of the Rinker Group; or
(ii) terminate, or vary the terms or performance of, any
material agreement or arrangement with Rinker or a
subsidiary of Rinker,
other than rights for which a written enforceable, irrevocable and
unconditional waiver or release has been obtained by Rinker and a copy
provided Bidder before the end of the Offer Period.
(j) Index out
During the period from the Announcement Date to the end of the Offer
Period, the S&P/ASX 200 Index does not fall below 4,800 at any time on
an ASX trading day.
(k) Equal access to information
During the period from the Announcement Date to the end of the Offer
Period, Rinker promptly (and in any event within two business days)
provides Bidder a copy of all information that is not generally
available (within the meaning of the Corporations Act) relating to
Rinker or any subsidiary of Rinker or any of their respective
businesses or operations that has been or is provided by Rinker or any
subsidiary of Rinker or any of their respective officers, employees,
advisers or agents (collectively, Rinker Disclosures) to any person
(other than Bidder or any other member of the CEMEX Group) for the
purpose of, or in connection with, soliciting, encouraging or
facilitating a proposal or offer by that person, or by any other
person, under which:
(i) any person (together with its associates) may acquire
voting power of 10% or more in Rinker or any subsidiary of
Rinker;
(ii) any person may acquire, directly or indirectly, any
interest in all or a substantial part of the business or
assets of the Rinker Group; or
(iii) that person may otherwise acquire control of or merge or
amalgamate with Rinker or any subsidiary of Rinker.
(l) Dividends
During the period from the Announcement Date to the end of the Offer
Period, other than interim or final cash dividends, the payment of
which does not result (or could not reasonably be expected to result)
in Rinker declaring dividends in excess of 35% of its consolidated net
profit for the financial year in respect of which the dividend is
declared or paid, Rinker does not make or declare any distribution
whether by way of dividend, capital reduction or otherwise and whether
in cash or in specie.
(m) No Prescribed Occurrences
During the period from the date of the Bidder's Statement to the end
of the Offer Period, none of the following occurrences (being those
listed in section 652C of the Corporations Act) happens:
(i) Rinker converts all or any of its shares into a larger or
smaller number of shares;
(ii) Rinker or a subsidiary of Rinker resolves to reduce its
share capital in any way;
(iii) Rinker or a subsidiary of Rinker enters into a buy-back
agreement or resolves to approve the terms of a buy-back
agreement under section 257C(1) or 257D(1) of the
Corporations Act;
(iv) Rinker or a subsidiary of Rinker issues shares, or grants
an option over its shares, or agrees to make such an issue
or grant such an option;
(v) Rinker or a subsidiary of Rinker issues, or agrees to
issue, convertible notes;
(vi) Rinker or a subsidiary of Rinker disposes, or agrees to
dispose, of the whole, or a substantial part, of its
business or property;
(vii) Rinker or a subsidiary of Rinker charges, or agrees to
charge, the whole, or a substantial part, of its business
or property;
(viii) Rinker or a subsidiary of Rinker resolves to be wound up;
(ix) a liquidator or provisional liquidator of Rinker or of a
subsidiary of Rinker is appointed;
(x) a court makes an order for the winding up of Rinker or of
a subsidiary of Rinker;
(xi) an administrator of Rinker, or of a subsidiary of Rinker,
is appointed under section 436A, 436B or 436C of the
Corporations Act;
(xii) Rinker or a subsidiary of Rinker executes a deed of
company arrangement; or
(xiii) a receiver, or a receiver and manager, is appointed in
relation to the whole, or a substantial part, of the
property of Rinker or of a subsidiary of Rinker.
(n) No Prescribed Occurrences between the Announcement Date and date
of Bidder's Statement
During the period from the Announcement Date to the date that is the
day before the date of the Bidder's Statement, none of the occurrences
listed in sub-paragraphs (i) to (xiii) of paragraph (m) happened.
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