Round Three For Rinker

After securing a majority of Rinker Group stock, Cemex S.A.B. de C.V. formally assumed control of the Australian operator in late June almost eight months


After securing a majority of Rinker Group stock, Cemex S.A.B. de C.V. formally assumed control of the Australian operator in late June Û almost eight months after a takeover campaign began. The suitor named three of its senior executives to replace existing Rinker board members, including Group Chairman John Morschel, based at Sydney headquarters, and Chief Executive David Clarke in West Palm Beach, Fla.

In a farewell to shareholders, Morschel indicated that Cemex had asked Clarke to continue in his capacity for the time being. The takeover nevertheless marks a major shift in the tenure of Clarke, who in 19 years presided over market platform and bolt-on deals that positioned the Group’s U.S. flagship, Rinker Materials Corp., as a top-five ready mixed, block, pipe & precast, and aggregate producer. He helped establish a North American beachhead for CSR Ltd. in July 1988, leading a $515 million buyout of legendary Florida concrete, cement and aggregate operator M.E. Doc Rinker. As head of CSR Rinker, then Rinker Materials Corp., Clarke oversaw deals extending the company in the Southeast and well beyond, especially ARC America (1990, $650 million); American Limestone and Florida Crushed Stone (2000, $211 million and $348 million); and, Kiewit Materials (2002, $540 million).

The later acquisitions saw Rinker Materials grow to represent 80 percent of the sales of Rinker Group, whose emergence as a top-10 global heavy building materials producer led to a March 2003 de-merger with CSR Ltd. As a stand-alone operator, Rinker Group had financial performance and growth ambitions warranting a New York Stock Exchange listing. Upon Rinker’s NYSE arrival in October 2003, Clarke noted, The primary purpose of this listing is to enable U.S. investors to buy the stock, as they can for our industry peers. The stock soared after 2003, peaking in early 2006 at nearly four times its Wall Street launch. Cemex’s final takeover offer valued Rinker shares about 3.5 times their October 2003 level.

As the Rinker stake grew, Cemex Chairman Lorenzo Zambrano affirmed, We are pleased with the support from [Rinker] shareholders [and] are looking forward to the integration, creating one of the world’s largest building materials companies.

Judging from deals that put their company on the U.S. map Û Southdown Inc. and RMC Group Û Zambrano and his staff have a solid track record integrating businesses into the Cemex model. Their latest integration process might challenge them to bring into Cemex operating methods David Clarke and Doc Rinker validated.