Australia | Oct 31 2006
By Greg Peel
Another chapter in the tale of the enigma that is building materials supplier Rinker (RIN).
Rinker has split analysts all year, between those who see a harder landing in the US housing market, such as Deutsche Bank (target $11.78), and those who have simply refused to change their view as Rinker’s share price has slipped away, such as JP Morgan ($21.03). Only last week, JP Morgan was beginning to wonder if there wasn’t downside to its forecasts.
Yet Rinker was long ago touted as a takeover target, although (a) this was when the share price was a bit lower and (b) what isn’t a takeover target at the moment?
Nevertheless, it’s happened, but the brokers in the FNA database are in unison – $17.00 is not enough. This morning ABN Amro (Hold), Merrill Lynch (Buy), Credit Suisse (Outperform), GSJB Were (Outperform) and Aspect Huntley (Hold) were all advising investors to hang on. Macquarie has upgraded from Underperform to Neutral, with the target shooting uop from $12.00 to $19.50. The remaining brokers are yet to report their views.
Consensus is that a bid around $20, with $21-22 suggested as a top end, would be more the ticket, although Aspect is suggesting positions should be reduced at $19.00, and Macquarie sees value eroding after $19.50.
There are a number of possible scenarios. Rinker has rejected the hostile bid as “cheeky”, suggesting Cemex may well up the ante. Another buyer – white knight or otherwise – may emerge from Europe or the US. Or Rinker may rush into a friendly merger as a defence. The latter would obviously be the least beneficial for investors.
Hands up who didn’t sell Coles (CML)? While the market is gripped in takeover frenzy, it must be remembered these things don’t always come off. But for the moment, analysts feel the ball is currently in the shareholders’ court.