Guest Blog: Housing increases more than offset by falling federal spending

by George H. Reddin

| Published on May 9, 2013

A new home undergoes construction. (Photo: Cecil Cardinal / Flickr)

A new home undergoes construction. (Photo: Cecil Cardinal / Flickr)

Merger and acquisition activity remains slow, but steady, as the outlook for many construction markets remains flat and disappointing. Spending on U.S. construction projects fell in March, as the biggest drop in government projects in more than a decade overwhelmed strength in home building. Construction spending in 2012 increased 9.8 percent; however, the first quarter saw year-over-year decreases in two of the three months.

Last year marked the first annual gain after five straight years of declines; however, construction spending is still well below healthy levels. Housing is helping to support building activity in the face of weakness in government projects, but many economists are expecting additional decreases in federal activity in the coming months as different agencies cope with across-the-board spending cuts that went into effect in March.

Recent transactions

Northern Frac Proppants LLC, based in Houston, Texas, has acquired land and frac sand reserves near Black River Falls, Wis., from Goose Landing Sand Co., LLC. Northern Frac Proppants LLC produces frac sand, which is used by oil and natural gas companies for hydraulic fracturing to enhance the recovery rates of hydrocarbons from oil and natural gas wells.

Summit Materials, LLC has acquired Westroc, Inc., and certain aggregates, ready-mix concrete, asphalt and paving assets from Lafarge North America, Inc. Westroc, based in Pleasant Grove, Utah, operates two aggregates sites and seven ready-mix concrete plants along the Wasatch Front. The Lafarge, Wichita Assets are comprised of two aggregates operations, three ready-mix concrete plants and one asphalt plant located in metro Wichita and the broader southeast Kansas area. Summit acquired mineral reserves in excess of 100 million tons through these transactions.

Other news

Votorantim Cimentos SA, Brazil’s largest cement producer, filed in April with the SEC to raise up to $5.4 billion in an initial public offering. Founded in 1933, Votorantim Cimentos SA is the eighth largest cement producer globally based on production capacity, with operations in the Americas, Europe, Africa and Asia. The company produces and sells a complete portfolio of building materials, which includes cement, aggregates, ready-mix concrete, mortar and other building materials.

georgeUntitled-1George H. Reddin is a principal in FMI’s Investment Banking practice. He can be reached at 919-785-9286 or greddin@fminet.com.

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