Aggregates Manager

December 2012

Aggregates Manager Digital Magazine

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Data A s the push toward year-end begins and buyers and sellers work diligently to close deals by Dec. 31, I am reminded how due diligence has become a full- contact sport. Never has the due diligence process been so contentious. Buyers feel they are the only bidder and are paying too much. Sellers be- lieve they are not receiving enough consideration, given their performance of a few years ago. Plain and simple, there is not enough "grease" in the system to facilitate a smooth due diligence. There is a significant supply of sellers and a reasonable number of buyers; however, match- ing buyer and seller objectives is currently at an awkward point. The only thing going for many deals is the pressure coming from lenders who are encouraging sales and asset divestitures. As one can imagine, this external pressure from the banks adds to the contentious nature of the deal process. The case for optimism is that, by the end of the first quarter in 2013, we will be past the November elections, past the "fiscal cliff" chal- lenges, and, hopefully, have a few more months of encouraging economic news. The 2012 Dodge Construction Outlook was recently released, and its executive summary starts with the mention "there has not been enough traction to say that the renewed expansion has taken hold." Ad- ditionally, the report says, "The main obstacle to stronger growth for the U.S. economy is the pervasive sense of uncertainty, which has damp- ened business investment and hiring." While the fourth quarter should be much of George H. Reddin is a principal in FMI's Investment Banking practice. He can be reached at 919-785-9286 or at greddin@fminet.com. No paths are available for smooth transactions the same in the merger and acquisition world, there is reason for optimism for 2013. Recent transactions U.S. Concrete Inc. announced that its wholly owned subsidiary, Central Concrete Supply Co., Inc., has entered into a definitive agreement to acquire Bode Gravel Co., Inc. and Bode Concrete LLC. Bode Concrete operates two ready-mixed concrete plants and 41 mixer trucks in the San Francisco area and produced approximately 243,000 cubic yards of ready-mix concrete in 2011. The purchase price was $24.5 mil- lion, plus potential earn-out payments of up to $7 million payable over a six-year period. The transaction is expected to close during the fourth quarter of 2012. AM Stock Report Company Cemex, S.A.B. de C.V. CRH plc Eagle Materials Inc. Granite Construction Inc. Heidelberg Cement AG Holcim Ltd. U.S. On-Highway Diesel Fuel Prices Ticker Current Value CX $9.04 CRG $18.86 EXP $48.22 GVA $30.21 HEI $53.98 HOLN $69.96 Martin Marietta Materials, Inc. MLM $82.31 MDU Resources Group, Inc. Texas Industries Inc. MDU $21.73 TXI $43.13 United States Lime & Minerals, Inc. USLM $43.81 U.S. Concrete Vulcan Materials Co. USCR $7.45 VMC $45.97 52-Week 52-Week High Low $9.48 $22.31 $53.75 $30.92 $60.45 $70.88 $93.71 $23.21 $46.11 $67.40 $8.17 $49.99 Sources: New York Stock Exchange, NASDAQ, and Wall Street Journal Market Watch. Currency conversion calculated on 11/1/2012. 3.44 $16.22 $19.48 $21.38 $33.87 $49.57 $63.64 $19.65 $21.89 $41.25 $1.90 $28.81 United States East Coast New England Central Atlantic Lower Atlantic 10/29/2012 One Week One Year $4.030 $4.036 $4.205 $4.149 $3.921 Midwest $3.984 Gulf Coast Rocky Mountain West Coast $3.945 $4.195 $4.187 West Coast less California $4.092 California $4.268 -0.086 -0.072 -0.038 -0.054 -0.090 -0.117 -0.054 -0.048 -0.111 -0.103 -0.117 +0.138 +0.150 +0.270 +0.155 +0.085 +0.118 +0.137 +0.236 +0.4080 NA +0.105 Source: U.S. Energy Information Administration (dollars per gallon, prices include all taxes). AGGREGATES MANAGER DIGITAL EXCLUSIVE December 2012 15A

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