M&A Activity Off to a Fast Start
After a, relatively speaking, quiet 2013, merger and acquisition activity is off to a feverish pace in 2014. Divestitures by Lafarge and Vulcan, and a merger between Martin Marietta and Texas Industries led the way. We have been anticipating such activity and believe that the improved economy and housing rebound are the start of a more robust merger and acquisition market for 2014. The market collapse is now in the rear view mirror, and buyers are looking forward again.
Martin Marietta Materials, Inc. signed a definitive merger agreement to acquire Texas Industries, Inc. for $2.1 billion in stock. Texas Industries shareholders will receive 0.7 Martin Marietta shares for each share of Texas Industries common stock they own at closing, with Martin Marietta shareholders expected to own approximately 69 percent and Texas Industries shareholders expected to own approximately 31 percent of the combined company. The combined company will operate under the name Martin Marietta Materials and will be led by the Martin Marietta executive team. The transaction is expected to close in the second quarter of 2014.
Bluegrass Materials Co., LLC acquired five aggregates quarries and related assets in Maryland from Lafarge S.A. for $320 million. Lafarge continues to divest of non-core assets, while refocusing on its core markets in the United States and Canada. Today, Lafarge operates a network of integrated positions, mainly located in Canada, the Great Lakes, and Mississippi River regions.
Lafarge Canada Inc. acquired eight ready-mix manufacturing plants from James Dick Construction Ltd. The newly acquired ready-mix concrete plants will operate under the James Dick Concrete name. The plants are located in Alliston, Bolton, Brampton, Caledon, Hamilton, Oshawa, and Scarborough, Canada.
Argos Cement LLC and Argos Ready Mix LLC will acquire assets of Florida Rock Industries, Inc. and Florida Cement, Inc. from Vulcan Materials Co. for approximately $720 million in cash. Vulcan is retaining all of its aggregates operations and cement segment’s ground calcium operations in Florida. The acquired assets are located in Florida and south Georgia, and include the Newberry, Fla., cement plant, Tampa and Port Manatee cement terminals and grinding facilities, 69 ready-mixed concrete sites, and 13 concrete block and building material sites. Vulcan will use the proceeds to initiate a tender offer to purchase $500 million of outstanding debt. In addition, the company exercised an option to purchase land containing 136 million tons of aggregates reserves in southern California for $117 million.
Summit Materials LLC completed its acquisition of Alleyton Resource Corp. and its affiliate Colorado Gulf, LP, based in Houston. Alleyton operates five sand and gravel sites and has seven ready-mix concrete plants in the west Houston metropolitan area. The transaction was valued at $210 million.
Irving Materials, Inc. acquired W.T. Congleton Co., which engages in manufacturing of ready-mix concrete. The company was founded in 1948 and is based in Lexington, Ky.
Oldcastle, Inc. acquired gravel-quarrying assets from Turner Gravel, Inc. based in Turner, Ore.
George H. Reddin is a principal in FMI’s Investment Banking practice. He can be reached at 919-785-9286 or at email@example.com.
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