Readymix to become subsidiary of Spanish Cemex group after Commercial Court ruling
CONCRETE manufacturer and supplier Readymix plc is to become a wholly owned indirect subsidiary of Cemex Espana SC, a company within the Spanish-established Cemex Group, under a scheme approved by the Commercial Court.
Mr Justice Peter Kelly approved a scheme of arrangement for the company after rejecting objections to it from two of Readymix's smaller shareholders, Tom Goode and Seamus Maye. He also confirmed a reduction of the company's share capital.
Rejection of the scheme was not justified on the evidence, would be unfair to almost 97pc of shareholders who voted in favour of the scheme and no evidence of wrongdoing had been established, he said.
The 25 cent share price payable under the scheme represented a premium of about 733pe on the closing price of 3 cent per company share on January 18 last and was "a substantial improvement" on the price of the shares over the last nine months.
Readymix plc, established in 1965, had a turnover of €45.1m for the year ended December 2011 and employed 310 people here and in the Isle of Man. 61.2pc of its ordinary shares are held by companies in the Cemex Group.
At a meeting last month, almost 97pc of the shareholders present voted in favour of the scheme of arrangement. 286 shareholders voted in favour of the resolution and eight against. Mr Maye, who owns .0000047 per cent of shares affected by the scheme and Mr Goode, who owns .00063 per cent of affected shares, voted against.
Mr Justice Kelly noted both Mr Goode and Mr Maye made serious allegations of wrongdoing and illegalities in the cement business, including anti competitive behaviour, below cost selling and cartel activities.
Both objectors, through their companies, had sued Readymix plc, CRH plc, Irish Cement Ltd and others, he noted. All the defendants had denied the claims and, while those proceedings had been before the courts for years, they had yet to come to trial for whatever reason, he also noted.
The judge said lawyers for both objectors had accepted the allegations of wrongdoing and illegality could not be resolved in the hearing related to the scheme of arrangement.
He rejected complaints by the objectors the proposed scheme failed to give the ordinary shareholder a true picture of the proposed transaction.
In that regard, he dismissed complaints of an inadequate explanation concerning payments Cemex had received over the past six years from Readymix. The objectors alleged Readymix had paid more than €12m to Cemex since August 2006 for the use of its brand and other allegedly minor services.
The judge said evidence was given the payments made were about €6.5m and they had been comprehensively explained. The payments were on foot of a commercial arrangement under which Readymix uses `Cemex way', an operating system developed by Cemex for its exclusive use and comprising a business model and information systems. On the evidence before the court, details of the arrangement were fully set out in Readymix's annual accounts, he added.
The judge also rejected arguments it was inappropriate to sanction the scheme given the claims of below cost selling and cartel activity by the company which alleged activities, the objectors said, had diminished the value of the shares over time.
The judge said the objectors were not presently in a position to prove the allegations made. Far from conclusively proving such claims, as they alleged, they had not proved them at all as, for whatever reason, their cases had not come to trial. The allegations were also denied on behalf of Readymix, he noted.
It was perhaps not surprising the share price had fallen substantially as the construction sector was hardest hit by the economic catastrophe that has befallen this country in the last few years, he also observed.