Excerpt from our Wall Street Breakfast, a one-page summary of this morning's key market-moving and stock-moving stories:
Summary: It looks like Cemex's opening bid of $12.8 billion for Australian concrete block supplier Rinker Group Ltd. is going to have to go up. Though the bid was the highest cash offer ever for an Australian company, it's not going to be enough to cover the company's current valuation. Last week the company's stock on the Australian exchange closed at A$18.51, significantly above the Mexican company's offer of A$17 per share. Cemex's interest in Rinker stems from the latter company's strong U.S. market presence; U.S. receipts account for 80% of the Australian company's earnings. Cemex currently owns 1,000 Rinker shares. A takeover would require ownership of 90% of the company's shares. Reuters reported that Fitch Ratings and S&P downgraded Cemex after this offer, citing credit deterioration and the debt-ridden nature of the deal as significant factors. Perpetual Trustees Australia Ltd., a major shareholder in Rinker, responded to the offer with a wait-and-see attitude. Cemex denied that the company was trying to profit from Rinker's recent stock slump, which was probably induced the U.S. housing slowdown.
Related links: Cemex Cements Leadership As US Cement Shortage Worsens • Reuters: Fitch, S&P may cut Cemex's rating on takeover bid • MarketWatch.com: Rinker seen rejecting initial Cemex bid: WSJ • Reuters: Australia's Rinker rejects Cemex bid, shares soar
Potentially impacted stocks: Cemex (NYSE:CX), Rinker Group OTC (OTC:RKGPF), Rinker Group ADR (RIN)
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