Martin Marietta Materials, Inc. today announced that it has completed its acquisition of Texas Industries, Inc., creating a market leading supplier of aggregates and heavy building materials. The transaction enhances Martin Marietta’s position as an aggregates-led, low cost operator in the perennially largest and fastest growing geographies in the United States.
With a leading U.S. aggregates position, the acquisition provides complementary, high quality assets in cement and ready mix concrete, augmented by the company’s best-in-class long-haul transportation network. The transaction was overwhelmingly approved by shareholders of both companies at their respective special meetings on June 30, 2014. Based on the closing price of Martin Marietta stock on July 1, 2014, the combined company has a market capitalization of approximately $8.8 billion.
Ward Nye, Martin Marietta’s Chairman, President and Chief Executive Officer, said, “We are excited to move forward as one company that is even better positioned to deliver increased value to shareholders, customers and employees. Uniting our complementary assets and leveraging our expanded geographic footprint provides Martin Marietta with an expanded platform for growth. In particular, Martin Marietta will benefit from greater exposure to the expanding cement markets in Texas and California - two of the largest and fastest growing markets for construction materials in the United States. I look forward to continuing to work closely with our team and all of our employees, including our new team members from TXI, to ensure a seamless transition as we continue to deliver superior product offerings and service to customers.”
Martin Marietta is well-positioned for long-term growth, with a network of more than 400 facilities spanning 36 states, Canada, and the Caribbean Islands. The company is a leading aggregates producer, and the increased scale and geographic and product diversity resulting from the transaction provides a broader set of opportunities for growth. In addition, select vertical integration is expected to reduce distribution and transportation costs, diversify end-markets and drive other value enhancing efficiencies. The company has an outstanding asset base to deliver superior product offerings and service to customers.
Financial Benefits of the Transaction
Martin Marietta continues to expect that the combination will generate approximately $70 million of annual pre-tax synergies by calendar year 2017, which would correspond to more than $500 million of total value creation for shareholders. Integration of the acquired business is underway and proceeding as planned. The company anticipates the transition to its target operating model to be completed by the end of the year. The combination is expected to be both accretive to Martin Marietta's earnings per share in 2014, excluding one-time costs; and cash flow accretive in the first full year following integration.
In addition, Martin Marietta continues to expect to utilize Texas Industries' more than $400 million in existing NOLs over the next few years. The company also believes that there is an opportunity to realize incremental value from the expected divestiture of identified non-operating real estate assets.
Delisting of Texas Industries
As a result of the completion of the merger, the common stock of Texas Industries, Inc. is no longer listed for trading on the New York Stock Exchange.
J.P. Morgan, Deutsche Bank and Barclays acted as Martin Marietta’s financial advisors and Cravath, Swaine & Moore LLP acted as its legal advisor. Citigroup acted as Texas Industries’ financial advisor, and Wachtell, Lipton, Rosen & Katz acted as its legal advisor.
About Martin Marietta Materials Inc.
Martin Marietta, an American company and a member of the S&P 500 index, is a leading supplier of aggregates and heavy building materials, with operations spanning 36 states, Canada and the Caribbean, and dedicated teams transforming more than 100 years of irreplaceable natural resources into the roads, sidewalks and foundations on which we live. Martin Marietta’s Magnesia Specialties business provides a full range of magnesium oxide, magnesium hydroxide and dolomitic lime products. For more information, visit www.martinmarietta.com or www.magnesiaspecialties.com.