Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

Cemex acquisitions

26/03/2021 Client: saad24vbs Deadline: 2 Day

TB0491

Copyright © 2017 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This case was written by Professor Michael H. Moffett for the sole purpose of providing material for class discussion. It is not intended to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of the material in this case is prohibited unless permission is obtained from the copyright holder.

Michael H. Moffett

CEMEX and the Rinker Acquisition (B) On April 9, 2007, the board of The Rinker Group Ltd. (Australia) approved a revised offer of US$15.85 per share after CEMEX S.A.B. de C.V. (NYSE: CX)—CEMEX—raised its offer 22%.1 With the backing of management, CEMEX obtained the needed 90% of shareholders’ approval on July 10, 2007, to close the acquisition of Rinker. CEMEX funded the acquisition nearly exclusively with short-term debt, in line with its proven acquisition process. This time, however, the combined purchase price and debt financing would both prove a challenge to CEMEX for years to come.

The Rinker Deal In the weeks and months that followed, many analysts debated whether CEMEX had overpaid for Rinker. One investment bank that followed CEMEX closely, Santander, still supported the acquisition:2

Although CEMEX has had to increase its offer price for Rinker, we believe that the acquisition is still potentially accretive for CEMEX, and that the resulting valuation is still attractive. In fact, applying a conservative estimate for CEMEX’s synergies of US$130 million per year to our sensitivity model would imply a year-end target price of US$37.60 per ADR, representing a potential upside of 7.0% from current levels, plus a 2.0% expected dividend yield in 2007. However, we believe that there may be additional upside in terms of the potential synergies, once the due diligence is completed. CEMEX management stated that there are potential savings in areas such as: capex; working capital; and taxes; although they have not been able to quantify this potential as yet. Our buy rating for stock in CEMEX remains unaltered.

CEMEX believed the Rinker acquisition had a number of strong business benefits, arguing that the deal expanded its diversity and strength in the aggregates and ready-mix concrete components of the concrete value chain. It also increased CEMEX’s market share in several of the key growth markets in the U.S. marketplace, namely Florida and Arizona. Although not as important, the added business segments in Australia and China expanded CEMEX’s global reach. The combining of CEMEX and Rinker operations in the U.S. market would also offer significant cost synergies (CEMEX had expanded its estimate to more than US$400 million in potential cost synergies in 2008). As described in Exhibit 1, CEMEX defended the Rinker deal as meeting all of the company’s corporate objectives demanded of all acquisitions.

CEMEX was a seasoned professional when it came to financing acquisitions. The company had paid down its net debt (debt less cash) from US$10.4 billion to just US$5.1 billion in the two years leading up to the Rinker purchase. The acquisition would be financed entirely with debt—US$14.2 billion, and would also require CEMEX to assume US$1.3 billion of Rinker’s existing debt obligations. Lorenzo Zambrano pledged to reduce CEMEX’s total net debt to under 2.7 times its EBITDA within two years.

“The combination of CEMEX and Rinker will create value for shareholders as well as customers, particularly in growth regions in the United States,” said Lorenzo H. Zambrano, CEMEX CEO and chairman, in a statement. “We intend to regain our financial flexibility as soon as possible and return to our steady state capital structure within two years.

Lorenzo H. Zambrano, Chairman and CEO, CEMEX.

1 CEMEX agreed not to adjust (lower) the offer price as a result of the dividend paid by Rinker at the end of 2006 to all shareholders. Arguably, immediately following the payment of the dividend, Rinker’s enterprise value would theoretically fall by the amount of the dividend. 2 “CEMEX: CEMEX Increases Its Offer for Rinker by 22%,” Santander Investment, Mexico City, April 10, 2007, p. 1.

For the exclusive use of A. Robinson, 2019.

This document is authorized for use only by Ashley Robinson in FIN-336 Multinational Corporate Finance 19EW1 taught by SNHU INSTRUCTOR, Southern New Hampshire University from Jun 2019 to Nov 2019.

2 A02-17-0008

The combined firms would, however, reduce competition in specific markets according to the U.S. Department of Justice (DOJ). As a result, the DOJ filed suit to stop the acquisition. The DOJ argued that the acquisition would lessen competition and create a monopoly in interstate trade and commerce in violation of Section 7 of the Clayton Act. The court found in favor of the U.S. Department of Justice on August 31, 2007, requiring CEMEX to divest a number of the acquired properties in the impacted Florida and Arizona markets. Despite shedding these selective units, the acquisition was completed.3

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Top Quality Assignments
Quality Assignments
Math Specialist
Accounting & Finance Specialist
Accounting & Finance Master
Instant Homework Helper
Writer Writer Name Offer Chat
Top Quality Assignments

ONLINE

Top Quality Assignments

I am known as Unrivaled Quality, Written to Standard, providing Plagiarism-free woork, and Always on Time

$51 Chat With Writer
Quality Assignments

ONLINE

Quality Assignments

I am known as Unrivaled Quality, Written to Standard, providing Plagiarism-free woork, and Always on Time

$43 Chat With Writer
Math Specialist

ONLINE

Math Specialist

I will cover all the points which you have mentioned in your project details.

$25 Chat With Writer
Accounting & Finance Specialist

ONLINE

Accounting & Finance Specialist

Give me a chance, i will do this with my best efforts

$15 Chat With Writer
Accounting & Finance Master

ONLINE

Accounting & Finance Master

You can award me any time as I am ready to start your project curiously. Waiting for your positive response. Thank you!

$39 Chat With Writer
Instant Homework Helper

ONLINE

Instant Homework Helper

I am known as Unrivaled Quality, Written to Standard, providing Plagiarism-free woork, and Always on Time

$53 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Pachuco cross 4 lines meaning - Spellbound book 6 answers - Instrumental in co founding the nfwa - Starbucks employee training and development - Briggs and stratton twin cylinder engine manual - Unit 4 DB Motivation, Incentive, and Conflict Resolution - Onlinenationaledu - Identify two social science issues related to war - Why is metal a good conductor - Maladjustment synonym - Paper 10 for Jennifer - 2 part essay , very detailed. - Https www youtube com watch v 7majoi3qmu0 - Dahon mu p8 recall - Drennan v star paving co - What is metal reactivity series - Appearance and reality in merchant of venice - STATISTICS ASSIGNMENT - Jukebox rebellion at vapor nightclub march 29 - Decision Maerketing/Essential Business Communication - Party list system advantages and disadvantages - Assignment 1.2: A Changing World Final Paper - Jelly bean trailer park wasaga beach - Conflict of interest management plan template - Ieee-519 harmonic distortion limits - Testout network pro certification exam answers - H1 part c - Occupational therapy interventions for multiple sclerosis - Global marketing keegan and green 9th edition pearson publishing - Brian foster shadow health assessment - Criminal law - Syrian War And EU In A Vulnerable Situation - Sources of error in projectile motion experiment - Myitlab access grader project - 5 - Difference between social science and social studies pptdifference between social science and social studies ppt - Daichi meaning in japanese - What is 100 factorial - Health care delivery system - How to calculate euac in excel - 120ah ritar deep cycle battery - Elvis meltdown case study - Fartlek training program example - Shadow health focused exam cough objective - Book Review - Calculate the length of ac - NURSING - Edexcel c3 jan 2013 - Cheez it twisterz hot wings - A theological argument offered by donne in "death be not proud" may be summarized as - Grade 7 math practice - 8 steps to successful change - Small Group Communication - Steve ballmer windows 1.0 commercial - Boolean algebra sop to pos conversion - Tenth green pty ltd bunbury - What is the diameter of mercury - Abbey grange medical practice - NTC/320: Discussion - Implementation Plan - Email Assignment - Rhetorical analysis of a public document - Business ethics - Planning the Project _02 - Forbes ten ridiculous hr ideas - Cpa plus network complaints - Carta continuous adaptive risk and trust - Jack russell puppies mornington peninsula - Gatsby turned out alright in the end quote meaning - Deodorant in a sentence - Punctuating Quotations - 93 little hobart st welch wv - Off the wharf lakes entrance - Http www woodlands junior kent sch uk homework britain html - Uob bank transaction code - Personal Leadership Philosophies - Assignment 1 - Fiery cross barn scene excerpt - Let her go lyrics - Is rest a rsa - Building and construction law journal - Learning theories an educational perspective 6th edition pdf - Elk grove pd lip sync challenge - Layunin ng lipunan kabutihang panlahat - Application of cross cultural psychology presentation psy 450 - Bangor school of nursing - Epson wf 7610 manual - Spartan mc limited edition - 20th century music history powerpoint - A disc rotates about its axis of symmetry - Project closing 5 - Assignment1010 - How to describe a solution - Wolfson college oxford accommodation - DQ - Speaker critique essay - Business Plan - A widely used disaster recovery approach includes - Wrexham council refuse department - Canterbury downs spring craft show - Compute the takt time for a system