Just shy of the two-year anniversary of Cemex’s $16 billion acquisition of Australia’s Rinker Group, the Mexican building materials giant has agreed to sell its entire Australian operations to Swiss-owned Holcim Group for about $1.64 billion
Source: Cemex S.A.B. de C.V., Monterrey, Mexico; CP staff
Just shy of the two-year anniversary of Cemex’s $16 billion acquisition of Australia’s Rinker Group, the Mexican building materials giant has agreed to sell its entire Australian operations to Swiss-owned Holcim Group for about $1.64 billion. The assets divested include 249 ready-mixed plants, 83 quarries, and 16 concrete pipe and products plants. The sale also includes Cemex’s 25 percent stake in the four-plant, one-grinding-mill Cement Australia, with an annual production of 5.1 million metric tons. Holcim had previously owned a 50 percent share of Cement Australia. The deal is pending a regulatory review and due diligence.
Cemex has been struggling with a debt load in the neighborhood of $20 billion since the Rinker Group and Humes Pipes deal, in what remains Australia’s largest corporate takeover. With Rinker logging more than 80 percent of its sales in the United States, the original deal looked to put Cemex in an ideal moneymaking situation. But with the onset of the global financial crisis timed just months after the sales, and steep homebuilding declines in Rinker’s top two markets–Florida and Arizona–Cemex’s profits began shrinking at an alarming rate. Holcim said it would finance the purchase by selling 55.4 million shares.
According to Cemex, the divestment is part of the company’s strategy to improve its financial flexibility, which includes implementation of $900 million in recurrent cost savings; rationalization of capital expenditures; and reduction of total debt and improvement of its debt profile.