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Company : Business Wire 
Wednesday, September 29, 2004 9:03AM IST (3:33AM GMT)
 
(BW)(CEMEX/RMC-GROUP)(CX)(CEMEX.CPO.MX)
CEMEX To Acquire RMC in a US$5.8 Billion Transaction
Monterrey, Mexico

CEMEX, S.A. de C.V. ("CEMEX") (NYSE: CX, BMV: CEMEX.CPO) announced Monday the recommended acquisition of RMC Group p.l.c. ("RMC") for US$4.1 billion in cash. Including the assumption of debt, the enterprise value of the transaction is approximately US$5.8 billion. The boards of directors of both companies have unanimously approved the transaction.

The combined company will be one of the world's largest building materials companies, with pro forma revenues of more than US$15 billion. The transaction is expected to close around the end of 2004.

"The acquisition of RMC is a very compelling strategic opportunity for CEMEX" said Lorenzo H. Zambrano, Chairman and CEO of CEMEX. "RMC's strong positions in cement, aggregates and ready mixed concrete will add to our existing operations in these areas and, combined with our global presence in cement products, enhance our leading position in the global building materials market. The combination further builds on CEMEX's business model through greater vertical integration and creates opportunities in new markets for our cement products. It also provides additional geographic revenue diversity, improving our position in markets with high growth potential - such as Eastern Europe - and building upon our position in more developed markets."

Lorenzo H. Zambrano continued, "This transaction meets our strict investment criteria and makes great financial sense for CEMEX. It will be immediately accretive to both free cash flow and cash earnings per share and we expect to achieve significant synergies".

RMC, headquartered in the UK, is a leading international producer and supplier of materials, products and services used primarily in the construction industry. It is one of Europe's largest producers of cement and one of the world's largest suppliers of ready mixed concrete and aggregates. In 2003, RMC sold approximately 15.7 million tons of cement, 55.5 million cubic meters of ready mix concrete and 158 million tons of aggregates, generating revenues, excluding joint ventures and associated undertakings, of US$7.9 billion.

CEMEX expects to achieve approximately US$200 million of annual synergies by 2007 as a result of the acquisition of RMC, mainly from centralizing management, trading network benefits, logistics, global procurement, energy and overall best practices.

The acquisition is expected to be immediately accretive to free cash flow and cash earnings per share for CEMEX. CEMEX expects that the acquisition will achieve its 10 percent return on capital employed target in 2007 and expects to achieve a ratio of net debt to EBITDA of 2.7 times by the end of 2005. This would be the same level of net debt to EBITDA that CEMEX had at the end of 2003.

The terms of the acquisition represent a premium of approximately 39 percent to the volume weighted average price of approximately 615 pence per RMC share over the 30 day period ended on 24 September 2004. The terms of the acquisition value the existing issued share capital of RMC at approximately US$4.1 billion.

CEMEX's acquisition is subject to customary UK takeover conditions, including regulatory approvals and the approval by a majority in number representing 75 percent or more in value of the RMC shareholders voting. CEMEX expects the transaction to close around the end of 2004.

CEMEX has obtained committed facilities, arranged by Citigroup Global Markets Limited and Goldman Sachs International, sufficient to satisfy in full the cash consideration payable to RMC shareholders under the terms of the acquisition.

Citigroup Global Markets Limited and Goldman Sachs International are acting as financial advisers to CEMEX in relation to the acquisition.

A webcast presentation will be accessible live at 10:00 AM EST. You may access this live presentation at www.cemex.com, or you may access the audio-only conference call by dialing (800) 510-0178 in the U.S., 0 800 917 1314 in the U.K. or (617) 614-3450 from other countries and ask to be connected to the CEMEX conference call.

A replay of the webcast and the conference call will be available beginning at 12:00 PM EST on September 27 and running through 12:00 PM EST on October 4. You may access the webcast presentation replay at www.cemex.com, or by dialing (888) 286-8010 in the U.S., or (617) 801-6888 from other countries. The replay passcode is 39725431.

If you have any questions regarding the webcast or conference call, please contact Paula Chirhart of The Abernathy MacGregor Group at 212-371-5999.

CEMEX is a leading global producer and marketer of cement and ready-mix products, with operations primarily concentrated in the world's most dynamic cement markets across four continents. CEMEX combines a deep knowledge of the local markets with its global network and information technology systems to provide world-class products and services to its customers, from individual homebuilders to large industrial contractors. For more information, visit www.cemex.com.

This press release contains forward-looking statements and information that are necessarily subject to risks, uncertainties and assumptions. Many factors could cause the actual results, performance or achievements of CEMEX or RMC to be materially different from those expressed or implied in this release, including, among others, changes in general economic, political, governmental and business conditions globally and in the countries in which CEMEX and RMC do business, changes in interest rates, changes in inflation rates, changes in exchange rates, the level of construction generally, changes in cement demand and prices, changes in raw material and energy prices, acquisition opportunities, changes in business strategy and various other factors. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein. CEMEX and RMC assume no obligation to update or correct the information contained in this press release.

EBITDA is defined as operating income plus depreciation and amortization. Free Cash Flow is defined as EBITDA minus net interest expense, capital expenditures, change in working capital, taxes paid, dividends on preferred equity and other cash items (net other expenses less non-operating asset disposals). Net debt is defined as total debt plus equity obligations minus cash and cash equivalents. All of the above items are presented under generally accepted accounting principles in Mexico. EBITDA and Free Cash Flow (as defined above) are presented herein because CEMEX believes that they are widely accepted as financial indicators of CEMEX's ability to internally fund capital expenditures and service or incur debt. EBITDA and Free Cash Flow should not be considered as indicators of CEMEX's financial performance, as alternatives to cash flow, as measures of liquidity or as being comparable to other similarly titled measures of other companies.

Citigroup Global Markets Limited is acting as financial adviser and corporate broker to CEMEX in relation to the acquisition and will not be responsible to anyone other than CEMEX for providing the protections afforded to customers of Citigroup Global Markets Limited or for providing advice in relation to the acquisition.

Goldman Sachs International is acting as financial adviser and corporate broker to CEMEX in relation to the acquisition and will not be responsible to anyone other than CEMEX for providing the protections afforded to customers of Goldman Sachs International or for providing advice in relation to the acquisition.

 
 
 
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