Vulcan sell Florida cement and concrete assets

Transaction further sharpens core aggregates focus and increases profitability and cash flows

VULCAN Materials Company, the largest producers of construction aggregates in the US, have entered into a definitive agreement to sell the company’s cement and concrete businesses in the Florida area to Cementos Argos for gross cash proceeds of US$720 million.

Vulcan will, however, retain all of their aggregates operations in Florida and, as part of the transaction, have entered into a supply agreement to continue to provide aggregates to the divested concrete facilities, at market prices, for a period of 20 years.

The transaction, which is subject to regulatory approval and customary closing conditions, is expected to close in the first quarter of 2014.

Concurrent with this announcement, Vulcan have initiated a tender offer to purchase US$500 million of outstanding debt.

In addition, the company exercised an option in December to purchase land containing 136 million tons of aggregates reserves in southern California for US$117 million. Vulcan previously operated this quarry under a lease which was scheduled to expire in 2017.

This land purchase will increase Vulcan’s pre-tax earnings by eliminating a US$7 million per year lease payment and, via a deferred like-kind exchange, allow the company to defer approximately US$37 million of cash taxes referable to the sale of land that is part of the cement and concrete assets transaction.

The completion of the asset sale to Cementos Argos and related restructuring and other transaction-related expenses will result in a pre-tax gain of approximately $210 million, while the US$500 million reduction in long-term debt via the tender offer will reduce the company’s annual pre-tax interest expense by approximately US$33 million.

Reaffirming the company’s ongoing commitment to building shareholder value through the execution of its core aggregates strategy, Don James (pictured), chairman and chief executive officer of Vulcan, said: ‘Divesting these non-core cement and concrete assets, at a full and fair valuation, allows us to further enhance our financial strength and strategic focus as the leading aggregates producer in the fastest-growing regions and urban markets of the US.’