Aggregates Manager Digital Magazine
Issue link: https://read.dmtmag.com/i/103664
Data 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. Mergers & acquisitions are slow throughout 2012, but supply and demand dynamics bode well for 2013 M &A activity ended 2012 the same way it started — slow. The constant theme throughout the year was uncertainty, which, as I have preached for the past few years, is the kiss of death for transactions. The year brought some good news: a new transportation bill, improved outlook for residential construction, improved corporate earnings, and continued deleveraging of buyer balance sheets. We survived the November elections, but still face the fiscal cliff and recession fears in Europe. That said, we were anticipating a number of deals to be announced prior to the end of 2012 (prior to Aggregates Manager deadlines). Buyers and sellers were working diligently to close transactions prior to year-end in anticipation of significant changes in tax rates on both ordinary income and capital gains in 2013. It is not unusual for deals to be pushed off until the very last minute during that time of year. Between the volume of work and the inefficiencies associated with the holiday season from Thanksgiving through New Year's, there is usually a mad rush to get deals closed. We end 2012 with a good supply/demand dynamic for deals that should bode well for activity in 2013. There is a pent-up supply of sellers and an improving demand from the buyers. 2013 should be a good year for mergers and acquisitions. Recent transactions Trinity Materials, Inc. will acquire the expanded shale and clay aggregates manufacturing busi- Stock Report Company ness from Texas Industries, Inc. As part of the transaction, Transit Mix Concrete and Materials Co. will transfer its remaining ready-mix concrete operations located in east Texas and southwest Arkansas to Texas Industries. These ready-mix concrete businesses use the shale and clay produced by the expanded shale and clay aggregates manufacturing business of Texas Industries. The Wall Street Journal reported that Martin Marietta Materials Inc. will make a friendly offer to buy rival Vulcan Materials Co., rather than attempt another hostile takeover. Martin Marietta originally offered half of one of its shares for each Vulcan share. Vulcan rejected the unsolicited bid of almost $5 billion last year, saying it undervalued the company. AM U.S. On-Highway Diesel Fuel Prices Ticker Current Value 12/3/2012 One Week One Year United States $4.027 -0.007q +0.096p East Coast Cemex, S.A.B. de C.V. CX $9.48 $4.59 CRH plc CRG $18.64 q $21.88 $16.56 $4.096 +0.004p +0.162p Eagle Materials Inc. EXP $52.69 p $56.40 $22.28 New England $4.221 +0.018p +0.185p Granite Construction Inc. GVA $31.19 p $31.29 $21.38 Central Atlantic $4.202 -0.001q +0.184p Heidelberg Cement AG HEI $55.76 p $60.36 $37.86 Holcim Ltd. HOLN $70.20 p $70.79 $52.01 Lower Atlantic $3.994 +0.004p +0.132p Martin Marietta Materials, Inc. MLM $90.90 p $93.71 $63.64 Midwest $4.014 -0.009q +0.107p MDU Resources Group, Inc. MDU $20.76 q $23.21 $19.59 Gulf Coast $3.901 -0.001q +0.073p Texas Industries Inc. TXI $47.75 p $48.28 $26.70 Rocky Mountain $3.989 -0.068q -0.046q $43.62 q $67.40 $41.25 West Coast $4.097 -0.018q -0.008q $8.98 p $9.69 $1.90 West Coast less California $4.046 -0.024q California $4.139 -0.014q United States Lime & Minerals, Inc. USLM U.S. Concrete Vulcan Materials Co. USCR VMC $9.04 even 52-Week 52-Week High Low $52.00 p $53.85 Sources: New York Stock Exchange, NASDAQ, and Wall Street Journal Market Watch. Currency conversion calculated on 12/7/2012. $31.87 NA -0.033q Source: U.S. Energy Information Administration (dollars per gallon, prices include all taxes). AGGREGATES MANAGER January 2013 17