Data Mining December 2011


December 2, 2011

M&A Activity remains slow, but Martin Marietta and Lafarge swap assets

George Reddin

The number of merger and acquisition transactions in North America was up 13 percent for the three quarters ending Sept. 30, 2011, while the total value of these transactions was up 28 percent from the prior year. The construction materials sector, on the other hand, has been flat in 2011, with small- to medium-sized deals dominating.

At the end of October, the outlook for construction materials remained cloudy. The Federal Transportation Bill was funded until March of 2012; however, the overall outlook for federal and state funding remained gloomy. President Obama was promoting the American Jobs Act without much success. There appeared to be some light at the end of the tunnel in Europe until Greece decided to seek a referendum on the debt plan. Third quarter earnings reports were coming in with year-to-date shipments of aggregates below 2010 levels. Major companies were beginning their budgeting and business planning efforts for 2012, and the outlook was not positive. These factors continue to keep a damper on merger and acquisition activity in the construction materials sector.

Recent transactions

Aggregate Industries completed its acquisition of Ennstone, Inc., a vertically integrated construction materials company headquartered in Falmouth, Va., with ready mix, sand and gravel, and limestone. (See story below.)

Martin Marietta Materials, Inc. and Lafarge North America Inc. have agreed to an asset swap. Under the terms of the agreement, Martin Marietta Materials, Inc. will receive Lafarge’s aggregates quarry sites, ready-mixed concrete and asphalt plants, and a road paving business in the Colorado Front Range and Wyoming markets. In exchange, Lafarge will receive aggregates sites located along the Mississippi River in Mississippi, Tennessee, Kentucky, and Missouri, as well as distribution yards along the lower Mississippi River, associated barging equipment, and a cash payment.

Other news

Cemex has announced that it will reduce its debt by the end of the year to comply with debt agreements. The company has promised to cut debt to no more than 7.0 times earnings before interest, taxes, depreciation, and amortization (EBITDA) by the end of the year. At the end of September, Cemex had debt amounting to 7.2 times EBITDA. Asset disposal will be a major part of the strategy to reduce debt. Cemex raised U.S. $80 million in asset sales during the first nine months of this year and expects to raise an additional U.S. $100 million to U.S. $200 million during the fourth quarter, with total proceeds from asset sales reaching U.S. $1 billion by the end of 2012.

Aggregate Industries Ennstone buyout finalized

Aggregate Industries U.S., part of the Holcim Group, on Nov. 1 closed its asset purchase agreement with Ennstone Inc., a vertically integrated construction materials company headquartered in Falmouth, Va.

“The closing of this transaction is a good fit strategically for Aggregate Industries, in particular, Aggregate Industries’ Mid-Atlantic business, and will maximize value for our stakeholders – employees, customers, and shareholders alike,” Bernard Terver, president and CEO of Aggregate Industries U.S., said in a press release. “In addition, this transaction will enable Aggregate Industries to strengthen its presence in the region.”

– by Tina Grady Barbaccia, News and Digital Editor

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