SYDNEY (XFN-ASIA) - Construction materials company Rinker Group Ltd said its board has rejected a 16.8 bln aud cash offer from Mexico's Cemex SAB de CV as it undervalues the company, is opportunistic and highly conditional.
Cemex announced its offer of 13.00 usd per share, equivalent to 17.00 aud per share -- based on an average exchange rate of 1.00 aud to 0.7645 usd, after the market closed on Friday.
The offer is at a 26 pct premium to Rinker's three-month average share price and is the biggest cash offer ever made for an Australian company.
Rinker chairman John Morschel said the Cemex announcement indicates that the unsolicited, hostile offer will be highly conditional.
'The preliminary view of the Rinker board is that the proposed offer is opportunistic and materially undervalues the company,' he said.
Morschel said Rinker's performance of 40 pct compound annual growth in earnings per share over the past five years, together with compound revenue growth of 19 pct per annum and earnings before interest and tax growing at a compound 33 pct a year over the five years makes it one of the best performing construction materials companies in the world.
He said shareholders should take no action in relation to Cemex's offer until directors make a formal recommendation after evaluating the offer.
Rinker has retained UBS as its financial adviser.
Cemex said the merger will create one of the world's largest construction materials group.
It said the two companies have complementary businesses in the US where Rinker earns about 80 pct of its income.
(1 usd = 1.30 aud)
bruce.hextall@xfn.com
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