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The Department of Justice announced today that it has reached a settlement that will require Mexico-based Cemex S.A.B. de C.V. to divest 39 ready mix concrete, concrete block, and aggregate facilities in Arizona and Florida in the event Cemex succeeds in its hostile takeover of Australia-based Rinker Group. The Department said that without the divestitures the proposed acquisition would substantially lessen competition for ready mix concrete in certain metropolitan areas in Arizona and Florida, as well as result in increased prices for ready mix concrete, concrete block, and aggregate sold to customers handling state Department of Transportation and large building projects. The total value of the Cemex/Rinker transaction, including Rinker's debt, is approximately $12 billion.

The Department's Antitrust Division filed a civil antitrust lawsuit today in U.S. District Court in Washington, D.C. to block the proposed transaction. At the same time, the Department filed a proposed consent decree that, if approved by the court, would resolve the lawsuit and the Department's competitive concerns.

"Without the divestitures required by the Department, purchasers of ready mix concrete, concrete block and aggregate in these areas of Florida and Arizona, including state departments of transportation, would likely have faced higher prices if the transaction is completed. The Department's action will ensure that these customers will continue to receive the benefits of competition,"said Thomas O. Barnett, Assistant Attorney General for the Department's Antitrust Division.

Ready mix concrete is a building material used in large construction projects including buildings, highways, bridges, tunnels, and other projects. Concrete block is a building material used in the construction of residential and commercial structures. Aggregate is crushed stone and gravel produced at quarries, mines, or gravel pits that is used in, among other things, the production of ready mix concrete, concrete block, and asphalt.

The Department concluded that the deal would have resulted in increased prices for ready mix concrete sold to customers handling state Department of Transportation projects and other large building projects in the metropolitan areas of Fort Walton Beach/Panama City/Pensacola, Jacksonville, Orlando, Tampa/St. Petersburg, and Fort Myers/Naples, Fla., and the areas of Flagstaff and Tucson, Ariz. In Flagstaff, Rinker and Cemex are the only two competitors capable of supplying ready mix concrete for these large projects, and in the other areas in which divestitures are being required there are only one or two firms in addition to Cemex and Rinker that are capable of serving large projects.

The Department also said that the acquisition also would have resulted in an increase in prices for concrete block for a significant number of customers in the metropolitan areas of Tampa/St. Petersburg and Fort Myers/Naples, Fla., where Cemex and Rinker account for more than 60 percent of concrete block sales.

Finally, the Department said that the acquisition would have resulted in increased prices for aggregate to a significant number of customers in the Tucson, Ariz., area where Cemex and Rinker are among a small number of firms capable of supplying aggregates meeting state Department of Transportation specifications.

On Oct. 27, 2006, Cemex announced its intention to acquire Rinker through a hostile cash tender offer. The offer was due to expire on March 30, 2007, but Cemex extended it until April 27, 2007.

Under the terms of the proposed consent decree, once Cemex obtains control of Rinker, Cemex must divest certain ready mix concrete assets to a single buyer in each of the areas of competitive concern. The terms of the proposed consent decree also require the divestiture of all of Rinker's concrete block-related assets in the Tampa/St. Petersburg and Fort Myers/Naples areas. Cemex must divest two aggregate plants in the Tucson, Ariz., area to the same acquirer that purchases the two ready mix plants to be divested at the same locations. Under the consent decree, the Department's Antitrust Division must approve the buyer of all of the divested assets.

Cemex, headquartered in Nuevo León, Mexico, produces and distributes cement, ready mix concrete, aggregate, concrete block, concrete pipe, and related building materials to customers in more than 50 countries. In 2006, Cemex reported total sales of approximately $24.6 billion. Cemex is the largest United States supplier of ready mix concrete and cement and the seventh largest United States supplier of aggregate. Approximately 25 percent of Cemex's revenues are earned in the U.S. Cemex operates in the U.S. through its wholly-owned subsidiary, Cemex Inc., which is headquartered in Houston.

Rinker, headquartered in Chatswood, Australia, produces and distributes aggregate, ready mix concrete, cement, concrete block, asphalt, concrete pipe, and other construction materials through its operations in the U.S. and Australia. In 2006, Rinker reported total sales of approximately $4 billion. Rinker is the second largest U.S. supplier of ready mix concrete and the fifth largest U.S. supplier of aggregate. Approximately 80 percent of Rinker's revenues are earned in the U.S. Rinker operates in the U.S. through its subsidiary, Rinker Materials Corporation, which is headquartered in West Palm Beach, Fla.

As required by the Tunney Act, the proposed consent decree, along with the Department's competitive impact statement, will be published in the Federal Register. Any person may submit written comments concerning the proposed decree during a 60-day comment period to Maribeth Petrizzi, Chief, Litigation II Section, Antitrust Division, U.S. Department of Justice, 1401 H Street, N.W., Suite 3000, Washington, D.C. 20530. At the conclusion of the 60-day comment period, the court may enter the final judgment upon a finding that it serves the public interest.


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