Rinker shares rise on Cemex’s bid

Following a $16.8 billion takeover bid by Mexican cement maker Cemex, Australian building materials producer Rinker Group’s shares soared almost 30 percent when they started trading on the Australian Stock Exchange on Monday. Rinker went up A$3.85 to A$18.55.

Cemex is the biggest supplier of cement in U.S. and the deal, if accepted, would help the company to further expand its presence.

A Rinker spokeswoman told Dow Jones Newswires in Sydney, Australia, that the offer was “a hostile bid, we had no knowledge of it”. She added, “It is too early at this stage to give any indication of what the board's response might be.”

According to Goldman Sachs JBWere analyst Matthew McNee, the bid made by Cemex was too low as he said, “Cemex would need to bid over $20 per share to have any chance of success.”

Sharing his thoughts was Atul Lele, who helps manage $307 million at White Funds Management in Sydney, including Rinker shares. “Cemex will have to raise their bid, given that the offer is below the highs seen earlier in the year and the ADRs have traded up above the offer. Investors would be expecting a higher offer to come through.” said Lele.

The Rinker board has urged its shareholders to take no action at present and has also not made any formal recommendation in relation to the Cemex offer.

Rinker chairman John Morschel said that the spontaneous offer was highly conditional. “The preliminary view of the Rinker board is that the proposed offer is opportunistic and materially undervalues the company," Mr Morschel said. "Directors will keep shareholders fully informed of further developments and will provide a formal recommendation on the offer in ample time for shareholders to make an informed decision."