The largest cash takeover in Australian history is now almost certain to succeed after Mexican construction giant Cemex today revealed it has moved to 82.68% of Rinker, with another 13 business days to get to the 90% compulsory acquisition level before the offer closes on 16 July.
The Mexicans played a tough game of poker, only announcing the final extension of their offer at 9am last Friday – the day it was scheduled to close.
In an era of failed takeovers, this is how an unusually buoyant flow of acceptances have rolled in over the past week:
Friday: 73.96% (last day, extension announced at 9am)
The Howard Government is loving every moment of this because the Rinker takeover will generate more than $2 billion in capital gain tax revenue – a record for a single deal in Australia. No wonder Wesfarmers are considered hot favourites for Coles as a cash offer from Texas Pacific Group minus any scrip rollover alternative would produce a similar tax bill.
Rinker shareholders have to pay the tax based on when they accept the offer and it now looks like about $14 billion of the $16.55 billion in Mexican cash deluging Australia will have been committed before 30 June.
The offer is pitched at $US15.85 a share, which translates to $18.70. However, Australian residents can elect to receive $19.50 for their first 2,000 shares. The shares are trading at $18.78 this morning, so 2,000 shares will set you back $37,560 and the Mexicans will pay you a guaranteed $39,000 by August 16 at the latest.
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It will take three days for the shares to clear and then the offer must be sent to you within five business days.
Money for jam perhaps, and it makes sense for recalcitrant institutions and hedge funds to play this game next week. If they accept today, they’ll cop a tax bill this financial year and wait a month to receive their $18.70. By selling to thousands of punters on Monday, they’ll get an extra 8c on market, earlier payment and a deferred tax bill for another year.
When Cemex launched its takeover bid last year, Rinker had about 95,000 shareholders. I’ll bet you London to a brick that they will end up processing more than 130,000 acceptances thanks to this rort that will end up costing the Mexicans an additional $200 million – about $30 million of which will go straight to the taxman.