Martin Marietta launch hostile bid for Vulcan Materials
Proposed takeover would create US-based global leader in construction aggregates
MARTIN Marietta Materials Inc. have launched a US$4.7 billion hostile takeover bid for Vulcan Materials Company which, if successful, would create a US-based company ranked as the global leader in construction aggregates.
As of 9 December 2011, the combined market capitalization of the two companies was US$7.7 billion and the combined total enterprise value was US$11.4 billion. The combined mineral reserves of the two companies is estimated to be around 28 billion tons.
Ward Nye (pictured), president and chief executive officer of Martin Marietta, described the combination of Martin Marietta and Vulcan as a ‘compelling opportunity’ for both companies’ shareholders, customers, employees and the communities they serve.
‘By bringing together our highly complementary assets, we have the opportunity to create the global leader in aggregates, led by the best team in the industry, drawn from both companies,’ he said.
‘The combined company will have one of the industry’s strongest balance sheets and, as we achieve expected synergies of US$200–250 million, the company will be well positioned to pursue a wide range of attractive growth opportunities and to continue delivering value to shareholders.
‘We also intend to maintain the dividend for the combined company at Martin Marietta’s current rate of US$1.60 per Martin Marietta share annually, or the equivalent of US$0.80 per Vulcan share annually, based on the proposed exchange ratio. This dividend rate is 20 times Vulcan’s current level,’ said Mr Nye.
The proposal, including the exchange offer, has the unanimous support of the Martin Marietta board of directors. Under the terms of the exchange offer, each outstanding share of Vulcan will be exchanged for 0.50 Martin Marietta shares.
‘We are bringing our proposal directly to Vulcan’s shareholders after Vulcan ceased participating in private discussions toward a negotiated transaction, which commenced over a year and a half ago,’ said Mr Nye.
Under Martin Marietta’s proposal, directors from both Martin Marietta and Vulcan would serve on the combined company’s board. It proposes that Don James, Vulcan’s chairman and chief executive officer, serve as chairman of the board, and that Ward Nye serve as president and chief executive officer, with executives from both companies on the senior management team.
The combined company would be headquartered in Raleigh, North Carolina, where Martin Marietta are based, and maintain a major presence in Birmingham, Alabama, where Vulcan are based.
In an immediate response to the bid, the board of Vulcan Materials said it would review the proposal and determine the course of action that it believes is in the best interests of the company and its shareholders.
