Sources: Martin Marietta Materials, Raleigh, N.C.; Staff reports

A stock-for-stock takeover Martin Marietta launched December 12 for Vulcan Materials Co. would create a heavy building materials powerhouse with aggregate shipments (2010 combined: 278 million tons) more than double those of its closest peers, Oldcastle Materials (118 million tons) and Lehigh Hanson Inc. (116 million tons), but limited additional scale in ready mixed concrete and asphalt production.

As the number one and two players in sand & gravel and crushed stone, Vulcan Materials and Martin Marietta have strong stakes from Mid-Atlantic and Southeast states into Texas. Martin Marietta would bring a merged company Intermountain, Great Plains and Upper Midwest presence, while Vulcan Materials would extend the Martin Marietta footprint to California, Pennsylvania, Illinois, Washington and Arizona.

Regarding market overlap, Martin Marietta President and CEO Ward Nye notes in a letter to his Vulcan Materials counterpart Don James: “From our understanding, any asset dispositions necessary to support regulatory approvals could be readily accomplished on a fast timeline given the likely interest from various buyers.”

The combined entity would bring what Martin Marietta projects as $100 million–$120 million in potential annual savings from purchasing and operating efficiencies, and $100 million–$130 million in savings from elimination of redundancies in areas including management, information technology, and facilities. Martin Marietta proposes the combined company a) maintain Raleigh, N.C., headquarters, and strong presence in Vulcan Materials’ headquarters city, Birmingham, Ala.; b) realign regional operating and sales structures; and, operate under an executive team with James as chairman and Nye retaining current titles.

Martin Marietta’s offer of 0.5 share for each share of Vulcan Materials is effective through May 18, 2012. If the merger clears, company ownership would be split 58 percent and 42 percent among Vulcan Materials and Martin Marietta shareholders, respectively.

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