Aggregates Manager

October 2013

Aggregates Manager Digital Magazine

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Data George H. Reddin is a principal in FMI's Investment Banking practice. He can be reached at 919-785-9286 or at Bolt-on acquisitions taking place in strong markets R ecent merger and acquisition activity remains driven by small strategic bolton acquisitions and divestitures driven by external pressures from banks and bonding companies. Additionally, this past month we saw two platform acquisitions, albeit relatively small, in strong markets in Texas. While the market is improving, especially in the homebuilding sector, the motivation for many sellers is pressure from banks and bonding companies. Many companies entered the downturn, that arguably started in 2007, with healthy backlogs and balance sheets. Lack of market demand and excess supply of material suppliers and contractors led to reduced volumes and tighter margins, which ultimately led to the deterioration of balance sheets. Enter the banks and bonding companies and the need for divesti- tures to remain in compliance. Many of these deals are helping rationalize markets in the short term and position the market to enjoy success as volumes increase. This will help companies in the construction materials sector. However, the biggest obstacle to recovery is the future of the federal transportation bill and states' ability to raise funds. At this time, the future of highway funding remains uncertain, especially with the 2014 mid-term elections right around the corner. Recent transactions Burnco Rock Products Ltd, Canada's largest independent concrete producer, has acquired the business assets of Gateway Concrete of Texas. This is Burnco's first acquisition in the United States, and it is in alignment with its overall Stock Report Company growth agenda. Founded in 2005, Gateway Concrete is a ready-mix concrete supplier for homebuilders and commercial contractors serving the Dallas-Fort Worth area. In the near term, the company will continue to operate under the name Gateway Concrete. Burnco, established in Calgary in 1912, is the largest independent supplier of ready-mix concrete in Canada and a major supplier of asphalt and aggregate products. ACG Materials acquired the assets of Pinnacle Materials LLC's Eagle Ford Division in Dilley, Texas. The assets include five crushed stone aggregate sites located in Dilley, Pearsall, Eagle Pass, and the Three Rivers area. ACG Materials will also provide items such as fencing, cattle guards, and weir gates required for new drilling locations in the Eagle Ford shale area. AM U.S. On-Highway Diesel Fuel Prices Ticker Current Value 52-Week 52-Week High Low 9/2/2013 One Week One Year United States $3.981 +0.068 p -0.146 q East Coast $3.993 +0.068 p -0.111 q New England $4.087 +0.043 p -0.107 q $26.07 Central Atlantic $4.055 +0.075 p -0.098 q $79.87 $50.38 $78.69 p $83.88 $61.88 Lower Atlantic $3.930 +0.068 p -0.121 q MLM $94.99 q $113.65 $77.44 Midwest $3.967 +0.083 p -0.105 q MDU Resources Group, Inc. MDU $26.75 q $30.21 $19.59 Gulf Coast $3.897 +0.068 p -0.129 q Texas Industries Inc. TXI $61.50 p $75.30 $39.13 Rocky Mountain $3.937 +0.010 p -0.280 q United States Lime & Minerals, Inc. USLM $58.72 q $61.46 $41.95 West Coast $4.128 +0.056 p -0.296 q U.S. Concrete $19.94 p $22.21 $5.86 Cemex, S.A.B. de C.V. CX $11.09 q $12.57 $7.52 CRH plc CRG $22.29 p $23.65 $17.62 Eagle Materials Inc. EXP $66.16 q $77.84 $42.50 Granite Construction Inc. GVA $28.95 q $37.74 Heidelberg Cement AG HEI $70.52 q Holcim Ltd. HOLN Martin Marietta Materials, Inc. Vulcan Materials Co. USCR VMC $49.46 p $59.48 $38.69 Sources: Wall Street Journal Market Watch. Currency conversion calculated on date of close 9/5/13. West Coast less California $4.032 +0.059 p -0.311 q California $4.210 +0.054 p -0.283 q Source: U.S. Energy Information Administration (dollars per gallon, prices include all taxes). AGGREGATES MANAGER October 2013 DataMining_AGRM1013.indd 31 31 9/18/13 3:20 PM

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