USD/MXN is trading lower as more details of the planned merger arise, and cooler heads prevail. USD/MXN has slid back down to 10.7175, primarily on the realization that CEMEX are likely to fund this deal offshore, just like CVRD did in the INCO deal, if only for the fact that 80% of Rinker's earnings emanate from the United States.
Furthermore, the offer, thought to be approximately AUD16.8bn, or roughly USD13bn is estimated to be a premium of around 27% over current market prices, however Rinker's shares have slipped approximately 30% since the end of April due to worries over the slump in the US housing industry - so CEMEX would be picking the company up at the same levels that existed six months ago.
Furthermore from an exchange rate basis, USD/MXN is currently 4-5% lower than the levels back then (11.15-11.20), and Aussie is only just over 1% higher, so net on net CEMEX would pick them up lower than the Mex peso priced per share of six months ago. Rinker makes crushed rock, cement, asphalt, concrete and concrete pipes, and as mentioned, roughly 80% of earnings come from the US, where it is has a major foothold in the fast-growing states of Florida and Arizona.
It is a great strategic fit for CEMEX, and will diversify their source of earnings. With this proposed deal, and the completion of Brazil's CVRD's takeover of INCO, the regional giants are flexing their muscles.
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