Vulcan Materials Co (NYSE: VMC) a major worldwide producer of sand gravel and other construction materials said on December 22 that it had rejected Martin Marietta Materials Inc.’s (NYSE: MLM) hostile takeover bid which valued the company at about $5 billion.
Vulcan said that its board of directors after consultation with its independent financial and legal advisors unanimously determined that the Martin Marietta exchange offer to acquire Vulcan at a fixed exchange ratio of 0.50 shares of Martin Marietta common stock for each Vulcan common share is inadequate and not in the best interests of Vulcan and its shareholders.
“The board strongly recommends that shareholders not tender any shares to Martin Marietta” stated a company news release.
“Our board’s position is clear – shareholders should reject Martin Marietta’s lowball and opportunistic exchange offer” said Donald M. James chairman and chief executive officer of Vulcan Materials. “The offer made at a low point in the economic and industry cycle does not come close to appropriately compensating shareholders for Vulcan’s strategic locations and leading positions in high growth markets unparalleled reserve base and proven ability to deliver rapid profitability and cash flow growth in economic recoveries. Martin Marietta is obviously trying to take value that rightly belongs wholly to Vulcan shareholders.”
The Vulcan board concluded that the company is much better positioned to capitalize on economic recovery than Martin Marietta. Vulcan has a stronger presence in the most attractive U.S. markets and a significantly more profitable aggregates business. It also noted that Martin Marietta’s offer carries significant execution risk further eroding the value of the offer. While Vulcan had explored a combination with Martin Marietta in the past it determined that a combination was not in the best interests of Vulcan Materials or its shareholders as detailed in Vulcan’s 14D-9 filing on December 22.
The company has 319 aggregates facilities including sand and gravel and crushed stone facilities. Many are aggregate dredging operations though the company does not release figures on how many dredging operations they own.