CEMEX's Acquisition Strategy - The Acquisition of Rinker Group
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Case Code: BSTR376 Case Length: 29 Pages Period: 2005-2010 Pub Date: 2010 Teaching Note: Not Available |
Price: Rs.500 Organization: CEMEX S.A.B de C.V Industry: Cement Countries: Mexico, Australia Themes: Mergers and Acquisitions |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Acquisition Integration Process
CEMEX had learnt in the course of its business that implementing the technical and management standards it followed in its existing plants was not sufficient to ensure the smooth integration of an acquired company. The company realized that it had to learn the processes already implemented in the acquired company, compare it with the corresponding processes it followed, and retain the better of the two...
Acquisition of Rinker
On October 30, 2006, CEMEX made an offer to buy all issued and outstanding shares of Rinker for US$ 12.8 billion. The offer was at a 27% premium over Rinker's share closing price as on October 27, 2006, and at a 26.2% premium over Rinker's three-month volume weighted average price...
Post-Acquisition Problems
In January 2008, CEMEX announced its financial results for the financial year ended December 31, 2007. The company reported net sales of US$ 21.7 billion, 19% higher than the net sales reported in fiscal 2006. Its net profit rose to US$ 2.9 billion from US$ 2.37 billion.
The results included Rinker's sales and net profit for the six months ended December 31, 2007. CEMEX ended the fiscal 2007 with a debt of US$ 19.9 billion as against a debt of US$ 5.81 billion at the end of fiscal 2006. Its net-debt-to-EBIDTA ratio went up to 3.6 by the end of 2007, from 1.4 at the end of fiscal 2006....
Future Tense?
In July 2009, CEMEX lowered its free cash flow forecasts for the fiscal year 2009 to US$ 1.6 billion as against the previous forecast of US$ 2.05 billion. This led to worries among the company's shareholders and lenders...
Exhibits
Exhibit I: CEMEX - Income Statements (2004-08)
Exhibit II: CEMEX Quarterly Income Statements (2009)
Exhibit III: CEMEX Balance Sheets (2006-08)
Exhibit IV: Rinker Stock Price Chart (April 2006 -- October 2006)
Exhibit V: Income Statements of Rinker (2006-07)
Exhibit VI: Balance Sheets of Rinker (2006-07)
Exhibit VII: A Note on Cement Industry in the US (2005 - 2009)
Exhibit VIII: CEMEX - Contractual Obligations as of December 31, 2008
Exhibit IX: CEMEX Stock Price Chart
Exhibit X: Mexican Peso Vs US$ Chart
Exhibit XI: CEMEX Cash Flow Statement (2008)
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