By Nick Gilbert
Eagle Materials has proclaimed that the company has entered into a definitive agreement with Lafarge North America to buy Lafarge’s Sugar Creek, Missouri, and Tulsa, Oklahoma, cement units along with the associated assets inclusive of eight ready-mix concrete units, two aggregates quarries, a fly ash business and six distribution terminals.
Eagle will also sign a transition sales agreement to supply cement to specific Lafarge units for 4-5 years and an agreement with a Lafarge associate to provide economical alternate fuels to the purchased units.
The agreed price is $446 million, under conditions of post-closing alterations. Trailing 12-month income up to 30 June 2012 for the cement units and associated assets were $178 million. The take-over will enhance Eagle’s US cement capacity by about 60%.
The President and Chief Executive Officer of Eagle Materials, Steven Rowley, mentioned that the agreement is an important event for the company. The organization’s plan was to develop the aggregates and cement segments of the business. Their first action was to obtain cement units that link but do not overlap the market reach of their existing units. The two Lafarge units are the right choice to meet the company’s aims and the deal is in line with its strict criteria for new investments. The acquired assets will enable the organization to contribute significantly to the recovery of the US construction sector. In addition, the deal places the organization close to power growth markets which are showing an increasing demand for the specialty oil well cement and the recent offering of northern white frac sand. The new aggregates, cement and concrete assets will offer immediate income for the company’s stockholders.