Australia | Jun 20 2007
By Rudi Filapek-Vandyck
Things have not exactly moved in Cemex’s favour recently, and that will probably turn out to be an understatement a little bit further down the track. Yesterday shares of the Mexican building materials multinational were hit by a recommendation downgrade from Merrill Lynch. The shares lost more than 4% both in New York and Mexico City overnight.
It’s probably a little bit unfair to put all the blame on Merrill Lynch analysts as Cemex management had released a lower-than-expected second-quarter growth forecast prior to the Merrill Lynch decision to pull back the recommendation to Neutral and cut earnings forecasts.
In Australia, acceptances for Cemex’s offer for Rinker (RIN) shares seem to dribble in rather slowly. As of Tuesday (yesterday) Cemex had received total acceptances for 62% of Rinker’s outstanding capital. With only three more days to go – the offer closes this Friday 7pm – it looks like management will have to get used to having to deal with minority shareholders in Rinker for a while still.
A stronger Aussie dollar has pushed down the price of Rinker shares on the local share market to $18.53 today – 97c below the $19.50 Cemex guarantees to every shareholder’s first 2000 shares.
This now means that the arbitrage opportunity in Rinker shares, for up to 2000 initial shares only, has increased from circa $1400 to more than $1900 (ex-costs) since FNArena first wrote about this mid last week.
Percentage wise, the arbitrage now offers a return of 5.23% on an investment of $37,060. As again reiterated in full page ads in newspapers this week, Cemex promises shareholders who accept the offer will receive their money within thirty days.
Investors considering to jump on the opportunity may want to call the Rinker shareholders info line first: 1800285948 as the administrative procedures with buying shares can take up to three business days. Investors are being advised to contact their broker or personal advisor before making any investment decisions.