Martin Marietta Materials, a Raleigh, N.C., crushed stone, sand and gravel producer, must divest an Oklahoma quarry and two Texas rail yards to clear anti-trust hurdles and complete its planned $2.7-billion purchase of Dallas-based rival Texas Industries Inc. (TI), the U.S. Justice Dept. said on June 26.
Martin Marietta last year shipped 128.4 million tons of aggregates across 30 states for $2.1 billion in net sales, with Texas accounting for its largest sales share, at 19%.
TI, which has 123 manufacturing facilities in five states, last year shipped 4.3 million tons of finished cement for $800 million in net sales.
The combined firm, valued at $8.5 billion, will have 400 quarries, mines, distribution yards and plants in 36 states, Canada and the Caribbean. The deal makes Martin Marietta the largest U.S. aggregates producer, surpassing Vulcan Materials Co.
The stock-for-stock purchase of TI (NYSE: TXI), the state’s largest concrete producer and third biggest in California, strategically positions the 53-year-old Martin Marietta to capitalize on a recovering housing market.
U.S. housing starts rose 18% to 923,400 last year, the most since 2007, reports the National Association of Home Builders.
The Martin Marietta divestiture involves three assets that primarily serve the Dallas-area, including an aggregate quarry in Mill Creek, Okla., and rail yards in Dallas and Frisco, Tex.
Martin Marietta (NYSE: MLM) common stock traded at $133.03-a-share on June 30, up 41.5% from a 52-week low of $94.01.
The deal is expected to generate $70 million in annual pre-tax synergies by 2017 through “complementary assets” and “an expanded geographic footprint,” said Martin Marietta’s President and CEO Ward Nye in a statement, adding that Texas Industries has “leading positions in some of the nation’s highest growth markets while maintaining a low cost profile.”
The merger, announced on Jan. 28, gives Martin Marietta shareholders 69% ownership of the combined company, which will continue operating under the same name and headquarters.
Martin Marietta executives will lead the combined entity, with “top talent across the combined organization” being retained on a “best athlete” approach, the companies said in a statement.