ALLENS ARTHUR ROBINSON is acting for Mexican-based cement maker Cemex in its $16.8 billion hostile takeover bid for Rinker Group — Australia’s largest ever all-cash takeover offer.
At this stage, Rinker’s directors have taken a “preliminary view” that Cemex’s offer undervalues the company, which when made on 27 October, was equivalent to about $17 per share. Rinker’s 1 November closing value was $18.67 per share.
When announcing the offer in October, however, Cemex said it then represented a premium of 27 per cent over Rinker’s last closing price prior to the bid announcement.
Rinker has also made an application to the Takeovers Panel asking it to set aside relief granted by the Australian Securities and Investments Commission (ASIC) for Cemex’s offer structure.
Ewen Crouch and Richard Kriedemann are leading AAR’s team working on the deal, assisted by senior associate Marcus Clark.
As well as being “far and away” the biggest cash takeover offer in Australian corporate history, Crouch said the deal represented a first in other areas.
“This is the first time that there has been an offer for both the shares and the US securities under the current regulatory regime.”
The fact that Rinker Group has shares listed on both the ASX and in American Depositary Receipts — in this instance, an American security that represents an interest in five Rinker shares — on the New York stock exchange, means bid documents have to be filed in both jurisdictions.
“Given the level of underlying US ownership in Rinker, we had to marry the requirements of both the US and Australian regulations,” Crouch said.
It’s also the first time in Australia that an offer has been made in US dollars with shareholders able to choose whether they want to receive US dollars or the equivalent in Australian dollars.
Because the funding for the bid is debt financed, Crouch said it meant confidentiality was paramount when organising the financing for the bid.
“With all the different rumours floating around the Australian market … maintaining confidentiality while organising [the bid] was absolutely key to avoid any influence on the share price.”
This week, Rinker has also asked the Panel to order CEMEX to amend its offer to ensure that all Rinker shareholders who elect to receive bid consideration in Australian dollars, receive the same Australian dollar amount.
The Panel said Rinker had submitted that the actual effect of CEMEX’s offer is that shareholders who elect to receive Australian dollars may receive different amounts depending upon the date on which CEMEX pays funds to its share registry.
US-based Cravath, Swaine Moore LLP is also acting as legal counsel to CEMEX on the offer.
Both Cemex and Rinker Group are international suppliers of construction materials.