U.S. to Cemex: Sell Your Plants

The U.S. Department of Justice would force Cemex to sell 39 plants in Florida and Arizona if its proposed acquisition of Rinker Group is successful. They are two of eight states where both companies operate concrete and/or cement operations.

The Justice Department's Antitrust Division filed the suit. The government would require Mexico-based Cemex to divest a combination of ready-mix, concrete block, and aggregate facilities in the two states, where both companies have extensive operations, to assu re a competitive environment.

In early May, Rinker's largest shareholder, investment company Perpetual, accepted Cemex's offer, removing a major hurdle to the deal announced late last year, according to Bloomberg News. Perpetual owns a 10.5% stake in Rinker, which is based in Australia.

Rinker operates as Rinker Materials in the United States, where its businesses are largely concentrated in the South and West. Rinker resisted Cemex's initial bid, but had a change of mind when Cemex increased its offer in April. Until Perpetual's approval, the deal came into question again after Rinker late in the month announced better-than-expected financial results for its U.S. operations amid the housing downturn. This led some to believe Cemex would have to raise its offer of $15.85 again.

The combination of Cemex and Rinker would create one of the world's largest building materials companies, with annual revenue of $23.2 billion and 67,000 employees in more than 50 countries. Visit www.cemex.com, and www.rinkermaterials.com.

HeidelbergCement and Hanson Come to Agreement

G ermany's HeidelbergCement will acquire Hanson PLC of Great Britain, both companies announced. The deal, priced at US$15.8 billion, would bring an end to one of the last remaining British conglomerates.

Although both parent companies are based overseas, the sale will have a huge impact on the U.S. concrete and construction market. North America accounted for 48% of Hanson's sales in 2006. With its U.S. office in Irving, Texas, Hanson operates 76 ready-mix plants, 92 concrete pipe and precast plants, 26 brick plants, and a variety of quarries, asphalt, and roofing tile facilities in North America.

HeidelbergCement has operated in North America since 1977 when it bought Lehigh Cement Co., based in Allentown, Pa. Lehigh operates 89 ready-mixed plants, in addition to concrete products, aggregate, and cement facilities in the United States.

The Heidelberg-Hanson deal is far from final, however. The London-based Financial Times has reported a bidding war may loom, with likely candidates including Lafarge, based in France, and Mexico-based Cemex.

Visit www.heidelburgcement.com,www.lehighcement.com, and www.hansonplc.com.

Titan Buys Virginia Producer

Titan America has bought Mechanicsville Concrete, which does business in Virginia as Powhatan Ready Mix. Powhatan will operate as a standalone supplier from its plants in Richmond, Midlothian, Powhatan, Goochland, and Petersburg.

The purchase came just two months after Titan bought S&W Ready Mix Concrete Co. S&W operated 26 ready-mix plants in coastal North and South Carolina. S&W now operates as a subsidiary of Titan America. For more, visit www.titanamerica.com

Producers Sound Off

In our last survey on www.theconcreteproducer.com, we asked if mega-mergers such as Cemex's purchase of Rinker were beneficial or harmful to the U.S. construction market. The response was an overwhelming “No.” Some replies included:

  • Mega-mergers limit competition. It is easy for a few big players to design strategies that finally drive competitors out. And the small consumer pays more for the product.
  • They leave fewer choices for consumers, and usually the cost of the product doesn't reflect the cost savings the mergers promise.
  • They hurt. If there is only one supplier, it will control the market.
  • Mergers may be good in some markets, yet may be detrimental to small producers. I am afraid of any one company in any industry becoming too large.
  • Relinquishing control of the core materials to foreign nations, either friend or foe, compromises our national security. (Editor's note: Rinker Materials' parent is based in Australia.)

But one person sees a bright side:

  • If we end up with a few “big-box” megacompanies, it will force smaller companies to get better on the service side. It will force the good, small companies to be the best they can be.