October 3, 2011
Economic and political issues surround the market
By George H. Reddin
August was an interesting month, with many economic and political issues adding to the uncertainty surrounding the outlook for the construction materials sector. During the last month, we saw the debt ceiling debate; a significant drop in the stock market; unrest in Libya, Syria, and other countries; and the official beginning of the 2012 presidential campaign that provided a well-publicized podium for Republican candidates to point out the problems facing our country. Job growth continued to disappoint, setting the stage for what will most likely be the issue on center stage for the 2012 presidential campaign. August also saw a major hurricane on the East Coast, as well as continued talk about sovereign debt concerns with a number of countries in the European Union.
All of these factors and events added to the already high level of uncertainty, and people, once again, are talking about a global slowdown and even a double-dip recession. Stock prices in the construction materials sectors were down 30 percent or more during the month from their 52-week highs, which is a far greater drop than the market as a whole.
This uncertainty has many of the traditional buyers on the sidelines, with a number of deals recently postponed or cancelled altogether. The United States will continue to struggle to attract capital in merger and acquisition transactions, as the multinational firms will continue to emphasize deals in emerging markets.
Cemex finalized its deal with Ready Mix USA and fulfilled a year-old acquisition plan. The purchase price for Ready Mix USA was roughly $350 million and in line with the price announced last October. Cemex and Ready Mix began their partnership in 2005 and had shared assets in the Southeast. When the deal was first announced, Cemex already owned two U.S. cement plants under the joint venture and agreed to buy sand and gravel pits and concrete plants from Ready Mix USA, increasing its operations in Arkansas, Mississippi, Tennessee, Alabama, Georgia, and Florida.
Winn Materials, LLC, owned by VantaCore Partners LP, has acquired the Cherry Grove limestone quarry from North American Limestone Corp. This operation, located in Todd County, Ky., has an estimated 39 million tons of limestone reserves and serves the southwestern Kentucky and northwestern Tennessee markets. This represents VantaCore’s fifth acquisition, expanding its operational presence to four states in the southeastern United States. The company will be renamed Winn Materials of Kentucky. This purchase follows the April 2011 announcement that Winn Marine intends to undertake a major expansion of its Clarksville port operations, positioning Montgomery County to become the largest commercial water port on the Cumberland River.