The Takeovers Panel’s (Panel) recent decision in CEMEX’s bid for Rinker highlights the traps in offering foreign currency under takeover bids.*
Foreign Currency Offer Structure
CEMEX is currently offering Rinker shareholders US$13 a share. Under the offer, shareholders can elect to receive their consideration in Australian dollars, converted at an exchange rate which depends on the date of acceptance and the date of payment relating to a particular accepting shareholder.
The effect on shareholders of the fluctuating exchange rates was apparent right from the early stages of CEMEX’s bid—at the time the offer was announced, the CEMEX offer price was equivalent to just less than A$17 a share. However, the appreciation of the Australian dollar since the offer was announced reduced the implied Australian dollar offer price. At the date of CEMEX’s first supplementary bidder’s statement (which CEMEX agreed to send in response to a number of concerns raised by the Panel), the US$13
