RIN - Rinker Group

[noirua]

Cemex has bid US$12.8 billion for Rinker Group...: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2pr.kU183k8&refer=home

 

[michael_selway]

Closed at $71.10.

So it's obviously gonna be around AUD $19 to $20 on Monday!!

do you reckon it willopen below that liekmaybe 17 and then slowly creep up to 19?

thx

MS

 

[Realist]

do you reckon it willopen below that liekmaybe 17 and then slowly creep up to 19?

thx

MS

No, I wouldn't think so. The US stock exchange tells us exactly what people will pay for RIN as they traded it all day Friday, I'll do the maths myself to work out the exact AUD$ price. We all know an exact price and it will open and stay at that price - give or take some small fluctuations.

It may infact open at $20 and go to $19, I doubt it'd open and climb though.

We'll wait and see anyway, I've been wrong before.

 

[Sean K]

This was a great pick up, well done Realist. When were we talking about takeover rumours and thought we picked the bottom? That was a few months ago wasn't it?

 

[GreatPig]

I don't hold any, but this should at least be good for my 12 month stock pick

GP

 

[Realist]

This was a great pick up, well done Realist. When were we talking about takeover rumours and thought we picked the bottom? That was a few months ago wasn't it?

Yep, it was a Buffet special, a large successful company with huge US exposure that makes great profits that dipped quite significantly on bad news. Get it cheap and hold. I've got dividends and the takeover is a huge bonus.

 

[Realist]

Originally Posted by ducati916

I posted this on the 09-02-2006 on reef

http://lightning.he.net/cgi-bin/sui...ic;f=2;t=000284

Current Price ADR $62.15
Intrinsic Value $21.27 - $28.71

edited...to shorten the read

None of this will come to light anytime soon, this is a slow burn type of bomb, but unless this trend is reversed, there could be problems down the road, as further decreasing revenues in the US that are not picked up in Aus & China, combined with increased CapEx, & poorly controlled costs will impact earnings badly.

If I was holding a long position, I'd be selling.

Ridiculous...

 

[noirua]

Cemex has bid US$12.8 billion for Rinker Group...: http://www.bloomberg.com/apps/news?pid=20601087&sid=a2pr.kU183k8&refer=home

The bid equates to just A$17 ( $13 ), providing the above article proves to be correct in all details. If the market expects no counterbid then Rinker may well trade in the range A$16.30 - A$16.60 - we do not know the complete bid package yet.

If the market thinks Lafarge or another outfit may counterbid, either a genuine bid or a spoiling exercise, then RIN will open above A$17.

I should have sold this stock at around A$21 when the opportunity was there, it now looks that i'll get somewhere between A$17 and A$19. For me this is a bit of a bail out.

 

[Julia]

The bid equates to just A$17 ( $13 ), providing the above article proves to be correct in all details. If the market expects no counterbid then Rinker may well trade in the range A$16.30 - A$16.60 - we do not know the complete bid package yet.

If the market thinks Lafarge or another outfit may counterbid, either a genuine bid or a spoiling exercise, then RIN will open above A$17.

I should have sold this stock at around A$21 when the opportunity was there, it now looks that i'll get somewhere between A$17 and A$19. For me this is a bit of a bail out.

That's pretty much my attitude also, Noirua. It peaked at $22.
All this excitement about the rising price is fine, but let's not forget that if it all comes to nothing the price will plummet very fast indeed.

Apart from Realist, is anyone else a dedicated long term holder, or are we all out when the profit appears to have peaked?

Julia

 

[Sultan of Swing]

Apart from Realist, is anyone else a dedicated long term holder, or are we all out when the profit appears to have peaked?

I bought a few at a little over $13 a few weeks back just after they dipped to the low $12 range. I bought them for a long term hold at the time.

I'm not quite sure what to do with this news. I'm greedy and want as much as I can get for them and will probably sell if the price is right, whatever that may be!!?!?!

Tomorrow will be an interesting day. I'm excited!! : That is, as excited as I get over a stock.

 

[Ferret]

I bought some in my super fund two months ago for just over $13. At that price it was cheap on fundamentals looked like a good buy and hold for a super fund.

Obviously, I'm happy to take a good profit but I also believe in the long term prospects for the company and am sorry I might not get to share these.

Also, I think it's a shame another good, successful Australian company is going to end up in foreign hands.

Ferret

 

[michael_selway]

No, I wouldn't think so. The US stock exchange tells us exactly what people will pay for RIN as they traded it all day Friday, I'll do the maths myself to work out the exact AUD$ price. We all know an exact price and it will open and stay at that price - give or take some small fluctuations.

It may infact open at $20 and go to $19, I doubt it'd open and climb though.

We'll wait and see anyway, I've been wrong before.

yeah thats true, however thebelow they are saying $17 but they also say likely to be rejected the bid

http://www.smh.com.au/news/business/rinker-set-up-to-be-sold/2006/10/29/1162056866598.html

NOBODY who owns shares in Rinker should be surprised that the company has received a takeover offer. The question for them is whether Cemex has a lay-down slam with its $17 a share, $16.8 billion bid.

In my opinion, the answer is no. In the rather prosaic world of concrete and gravel, Rinker has league-table leading statistics. Rinker's board can use them to argue that Cemex has lobbed an opportunistic bid.

One thing the board won't do is declare that Rinker is not for sale. The reality is that the group was set up as a takeover target when it was spun out of CSR in a one-for-one share split in March 2003.

Rinker owns the Readymix concrete, gravel and pipe operation in Australia but its focus from day one has been on selling gravel, cement, concrete, asphalt and concrete pipe in the United States, and in high population growth regions including Florida, Nevada and Arizona in particular.

Chief executive David Clarke has run the company efficiently since the spin-off and has executed a steady stream of mid-sized acquisitions to bulk the group up in the US, which now accounts for 80 per cent of group earnings.

But Rinker is still a middle size fish in the pool it is swimming in, and a takeover bid from one of the bigger players has always been seen as a possible profitable conclusion to the spin-out strategy.

Cemex fits the bill generally: it has a market value of $US22 billion, almost twice as much as the $US11.8 billion price tag it is putting on Rinker (the advertised value of the bid is $US12.8 billion, because Cemex will also inherit about $US1 billion of Rinker debts if its bid succeeds). Other candidates, and possible auction participants, are the French group Lafarge, which is valued at $US23.8 billion, and the Swiss giant Holcim, which is worth $US33 billion.

A Rinker takeover would give Cemex a powerful position in America and put together two of the industry's star performers: Rinker and Cemex are posting the best and second best returns on shareholders' equity in the industry, 27.6 and 23.1 per cent respectively. That's well above Holcim's return of 15.4 per cent, and Lafarge's return of 12.5.

Cemex has been working for about three months on the bid with its investment bank, Citigroup, and has come up with a price that it believes, with some justification, to be substantial.

The $17 offer is 26.2 per cent above Rinker's average share price in the past three months, and 22.6 per cent above its closing price of $13.87 last Thursday (Friday's close of $14.70 is misleading, because traders got wind of the bid just before the close of trade). It is also pitched at 8.7 times Rinker's earnings before interest, tax, depreciation and amortisation, and at a solid 9.2 times EBITDA including Rinker's debts.

Cemex told its shareholders on the weekend that Rinker itself recently estimated that the average EBITDA multiple for a lot of takeovers in the industry was 8.1 times, less than its bid for Rinker. And the bid price is also the equivalent of 17.1 times Rinker's earnings per share in the year to March 31, 2006: that is 20 per cent above the multiple of about 14 times earnings that seems to be a plimsoll line for companies in the heavy materials industry.

Rinker can still make a reasonable case that its shareholders deserve more, however. The group has increased sales at an average rate of 19 per cent a year in the past five years and has grown earnings per share at a rate of 40 per cent a year over the same period: this is industry-leading performance and it drove the group's shares up from less than $5 a share just after the spin-off in 2003 to a peak of $22.22 in late April this year.

But then the share price started falling, and falling, to a low of $12.31 in mid-September, on concerns that America's housing boom was imploding. Housing development in the high population-growth US states that Rinker operates in is a key source of income and profits for the group.

If Rinker opposes the $17 offer as expected, its defence (and Cemex's attack) will revolve around the US housing downturn, and its implications for Rinker's growth in future.

Boom times are certainly over for the time being in the US housing market: spending on new housing in the US fell by 17.4 per cent in the year to September and the slowdown was the main reason America's economy only expanded by 1.6 per cent in the year to September.

Rinker can argue, however, that the downturn is only cyclical and point out that stockbroker analysts still expect the group to boost earnings in the current year from $1 a share to about $1.18 a share. Cemex's bid is therefore only valuing the group at 14.4 times the predicted earnings.

The bid would be pitched at only 12.2 times expected earnings in 2007-2008 if Rinker's five year record of raising earnings per share by an average 40 per cent a year applied. But Cemex will argue that the profit pace Rinker set in the last five years is irrelevant, that in those years Rinker was benefiting from a housing market bubble that has now ended. The slowdown has been particularly abrupt in Florida, the state which is the source of almost 45 per cent of Rinker's cash flow.

If that doesn't work, it will probably sweeten the bid, and win the day.

thx

MS

 

[Sweet Synergy]

Got this off Etrade this morning ... thought it might be of interest. I don't hold any RIN .... but good luck to those that do!

As the Australian market opens this morning there will be a lot of attention on Rinker, the quarrying and ready mix concrete spin off out of CSR. Over the weekend Mexico's Cemex, the world's No. 3 cement maker, bid $16.8 billion or $17.10 per share for Rinker to create one of the world's biggest building materials companies with huge U.S. operations. Cemex operates in 50 countries, while Rinker has 80% of its business in the United States, mostly in Florida and Arizona, and the rest in Australia and China. Rinker's share price closed up 4% on Friday at $14.70 on speculation of a bid and the price is likely to go above the $17.10 bid price when trading opens this morning. The Rinker board has already rejected the offer and I'm sure the hedge funds will be punting on a higher bid, either from Cemex or someone else. If Cemex wins it would become the largest ready-mix concrete maker and the largest aggregates firm in the world, but it would remain behind France's Lafarge and Swiss-based Holcim Ltd. in cement. It would also be the biggest-ever takeover by a Mexican company -- more than twice the size of Cemex's 2005 acquisition of Britain's RMC for $5.8 billion. Cemex plans to finance the deal with 100 percent new debt. Medina said Cemex's debt pile would hit $19.5 billion in the deal, although it is likely to cut its current net debt level of $7.14 billion before the transaction is completed. Cemex's share price slumped 5% on Friday as analysts worried about the size of the acquisition and the additional debt for Cemex. Cemex Chairman Lorenzo Zambrano vowed to return Cemex's finances to its so-called "cruising speed" of 2.7 times net debt to earnings before interest, taxes, depreciation and amortization, within two years even if it means selling assets. Rinker is focused on the fast-growing states of Florida and Arizona and its business in Australia, where it is the market leader. The combined company would have revenue of $23.2 billion, Cemex said. A Mexican broking analyst Carlos Hermosillo, who is with the Vector brokerage in Mexico City, "The operation makes a lot of sense because Rinker is more profitable than Cemex. And I think they are being conservative about cost savings." Cemex expects to see about $130 million in pretax annual cost savings by the third year following the acquisition. Asked why Cemex only saw so few savings from Rinker, Lorenzo Zambrano said: "It is a well run company." A Rinker spokeswoman in Sydney said the company had not been expecting a takeover offer. "It was clearly an unsolicited bid. It's too early to make any comment at this stage about our response," said Rinker spokeswoman Debra Stirling.

Charlie Aitken, the head of trading at institutional broker Southern Cross Equities, and one of the key writers at Eureka Report, said he will be shocked if Cemex wins Rinker with its current bid. "This is one where the fund managers will fight it out, they will be looking for something closer to A$20 before they even consider selling," Aitken said, noting Rinker had been at the offer price in early June. The Dow Jones Newswire is running a story that the company is going to reject the offer as opportunistic

 

[Julia]

11.11 am price is dropping fast Has there been some news?

Julia

 

[JAK]

Hi all, some urgent advice would be appreciated ......

Last night through etrade a put a limit to sell my RIN shares - Good Until Cancelled

What indicators should I be looking at to see if it will sell, and at what point should I consider reducing $ price limit if it looks unrealistic ?

I only have etrade no other software

Thanks

 

[noirua]

I've sold my shares in Rinker Group this morning. Hope it goes well for those who have stayed with it, who knows, you could get $20.

 

[niknah]

Judging by the volume in previous months, many people may have got in at around $14-$13, alot of them maybe willing to sell.

I'm holding, the bid will fail and there may not be another bid but they'll probably get to this price again later on when US housing recovers.

 

[TheRage]

I sold this morning also. I hope the Cemex bid falls through and the share prices dives so I can jump back into rinker. I really like the fundamentals on this company.

 

[Realist]

18.43 now.

I'll hold, just 3 more weeks and we get dividends as well.

No point in selling yet, the offer gives a floor to the price, we may get $21 plus dividends - who knows?

 

[Julia]

I can understand those of you who have sold this morning. I was tempted to do the same, but decided it was a bit premature in view of no official statement from the RIN board yet. Of course, if they outright reject it and leave no room for increased offer, then I'll be sorry and will revert to a long term hold. Article from the SMH today.

http://www.smh.com.au/articles/2006/10/29/1162056866586.html

Julia