Cemex Lines Up Financing

Mexican cement leader Cemex has been busy lining up financing for its audacious, all-cash $12.8 billion hostile bid for Australian building materials group Rinker. The Mexican company has secured commitments from BBVA, Citigroup, JP Morgan and Royal Bank of Scotland Group. It is thought much of the financing will be done through Cemex’s Spanish subsidiary, Cemex España. Citigroup Global Markets and JP Morgan Chase will act as advisors to Cemex. Rinker has appointed UBS to advise. On Friday Cemex, the world’s third-largest cement producer, offered to acquire all of Rinker’s outstanding shares at $13 per share, 27% over the closing price on the Australian Stock Exchange. An initial statement from Rinker’s chairman, John Morschel, Monday, commented that Cemex’s offer was “opportunistic and materially undervalues the company”. The takeover, if approved, will be the largest by a Mexican company as well as the largest ever in the building materials sector. It would create the world’s largest building materials company with revenues of $23.2 billion and more than 67,000 employees in over 50 countries, according to Cemex. The acquisition would increase the Mexican producer’s presence in the US market as well as giving it an entrance into the Australian market. Meantime, Fitch ratings has placed Cemex and Rinker on rating watch negative in expectation of the “significant leverage and deterioration of credit fundamentals of both companies” resulting from the debt financing.