CEMEX completes acquisition of RMC - CEMEX completes acquisition of RMC - CEMEX USA
Monterrey, Mexico - March 1, 2005
CEMEX, S.A. de C.V. ("CEMEX") (NYSE: CX; BMV: CEMEX.CPO) announced today that it has completed the acquisition of RMC Group p.l.c. ("RMC"). The boards of directors of CEMEX and RMC, as well as RMC shareholders, European Union and US regulators, and the High Court of Justice in England and Wales have approved the acquisition. The enterprise value of the US$4.1 billion cash transaction, including the assumption of debt, is US$5.8 billion.
"This is an important day for CEMEX," said Lorenzo H. Zambrano, Chairman and CEO of CEMEX. "With the integration of RMC, CEMEX will enhance its position as one of the world's largest building materials companies, with global presence in cement and aggregates and a leading position in ready mix concrete. The addition of RMC enhances CEMEX's growth platform and diversifies our geographic base by strengthening our presence in the US - the world's largest cement importer - and gives us exposure to high-growth markets in Eastern Europe and an important position in mature markets in Western Europe."
Mr. Zambrano continued, "In addition to the compelling industrial rationale, there is solid financial logic to this combination. The acquisition enhances our strong free cash flow, lowers our cost of capital and offers significant synergy potential."
"The integration process will begin immediately. RMC's customers will benefit from our operating expertise and from CEMEX's vertically integrated network, which enables us to offer high quality products and reliable services."
With the integration of RMC, CEMEX will have an estimated production capacity of 97 million tons of cement, enhancing its position as the third largest cement company in the world. CEMEX, with RMC, will be the largest ready mix company in the world, with an estimated production of 77 million cubic meters of ready mix concrete. Additionally, the combined company will become the fourth largest aggregates company in the world.
The addition of RMC improves the balance of CEMEX's portfolio by diversifying cash flows, better positioning CEMEX for profitable growth throughout business and economic cycles. RMC's leading position in Europe extends CEMEX's reach into new markets that complement CEMEX's solid position in the Americas, increasing trading opportunities and expanding CEMEX's ability to service more customers.
CEMEX expects to achieve approximately US$200 million of annual synergies by 2007 by standardizing some management processes, capitalizing on trading network benefits, consolidating logistics and improving global procurement and energy efficiency.
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.
CEMEX is a growing global building solutions company that provides products of consistently high quality and reliable service to customers and communities in more than 50 countries throughout the world. The company improves the well-being of those it serves through its relentless focus on continuous improvement and efforts to promote a sustainable future. For more information about the company, 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.