Martin Marietta Materials and Texas Industries Agree to Combine
Creates Leading U.S. Aggregates Producer; Vertical Integration in
Select Markets, Greater Scale, and Increased Geographic and Product
Diversification will
Approximately
Transaction Expected to be Immediately Accretive to EPS
The combination will create a market leading supplier of aggregates and
heavy building materials, with low-cost, vertically integrated aggregate
and targeted cement operations. With greater geographic and product
diversity and a leading distribution network, the combined company will
have uniquely positioned assets across some of the nation's largest and
fastest growing geographies, such as
Based on the closing stock price for Martin Marietta on
Strategic and Financial Benefits of Transaction
-
The Leader in the U.S. Aggregates Business: Martin Marietta
will become the nation's largest producer of construction aggregates,
supplying the crushed stone, sand and gravel used to build the roads,
sidewalks and foundations on which Americans live. The addition of
Texas Industries will add approximately 800 million tons of aggregates reserves, bringing the total to over 13.5 billion tons.Texas Industries shipped nearly 15 million tons of sand, gravel and crushed stone during fiscal year 2013.Texas Industries is a major supplier of aggregates in high-growth markets such asTexas , and has long-focused on the synergies available from operating in aggregates as well as cement and ready-mix. -
Increased Scale, Enhanced Growth Exposure and Vertical Integration
in Select Markets: With vertically integrated operations across
aggregates and targeted cement, the combined company is expected to be
even more competitive.
Texas Industries increases Martin Marietta's presence in the Southwest, with state-of-the-art cement production facilities concentrated primarily inTexas andCalifornia - two of the largest and fastest growing markets for construction materials inthe United States . The increased scale and geographic diversity resulting from this transaction will provide a broader set of opportunities for organic and inorganic growth. In addition, select vertical integration will improve distribution and transportation costs, diversify end-markets and drive other value enhancing efficiencies. The combined company will also have an outstanding asset base that can deliver superior product offerings and service to customers. -
Significant Synergy Opportunities: The transaction is expected
to generate approximately
$70 million of annual pre-tax synergies by calendar year 2017, which would correspond to over$500 million total value creation for shareholders. Key drivers of these synergies include the consolidation of corporate overhead and duplicate functions, enhanced revenue opportunities and increased operational efficiencies through the adoption of best practices and capabilities from each company. -
Incremental Value Creation through Utilization of NOLs and
Potential Real Estate Divestitures: Martin Marietta expects to be
able to utilize Texas Industries' more than
$400 million in existing NOLs over the next few years. In addition, the companies believe that there is an opportunity to realize incremental value from the expected divestiture of identified non-operating real estate assets. -
Financial Strength and Flexibility: The transaction is expected
to be immediately accretive to Martin Marietta's earnings per share in
2014, assuming refinancing of Texas Industries' outstanding debt at or
around the closing of the merger and excluding one-time costs. Martin
Marietta expects that at the closing of the merger the combined
company will maintain its strong existing credit ratings and have pro
forma leverage of less than 3.0 times EBITDA for the 12 months ended
December 31, 2014 . The combined company will continue to adhere to Martin Marietta's strict operational and financial discipline and, with improved access to capital, will be well-positioned to pursue a wide range of attractive growth opportunities to continue delivering value to shareholders. -
Strong Balance Sheet with Solid Cash Flows and Meaningful Dividend:
The combined company will maintain a strong balance sheet with
significant cash flow, giving it the ability to pay a meaningful
quarterly cash dividend. The combined company intends to maintain the
dividend at Martin Marietta's current rate of
$1.60 per Martin Marietta share annually, equivalent to$1.12 perTexas Industries share annually, based on the proposed exchange ratio. - Enhanced Value for Customers: The size and scale of the combined company will enable Martin Marietta to provide even more value for customers. With a collective workforce of approximately 7,000 highly-skilled employees and a shared commitment to providing exceptional construction materials and the best service and solutions, the combined company will be even better equipped to serve its customers and communities.
-
Greater Employee Opportunity: This combination creates an even
stronger base of talent by uniting two highly-skilled workforces with
a strong commitment to serving customers and communities. As part of a
stronger, larger company,
Martin Marietta andTexas Industries employees will benefit from greater career and professional development opportunities created by this transaction.
Management, Board Composition and Headquarters
After the close, the combined company, which will operate under the name
An individual jointly selected by
Timeline and Approvals
The companies anticipate closing the transaction in the second quarter
of 2014. The transaction is subject to regulatory approvals, including
expiration or termination of the applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act and other customary closing
conditions. The transaction is also subject to the approval of
Texas Industries' two largest shareholders, representing approximately
51 percent of shares outstanding, have agreed to vote all of their
shares (or in some limited circumstances, about 35 percent of the
outstanding shares) of
Martin Marietta Fourth Quarter and Full Year 2013 Earnings Results
In a separate press release issued today, Martin Marietta announced its
earnings results for the fourth quarter and full year ended
Advisors
J.P. Morgan, Deutsche Bank and Barclays are serving as Martin Marietta's
financial advisors and
Conference Call and Webcast
About
About
TXI is the largest producer of cement in
Cautionary Statements Regarding Forward-Looking Statements
Certain statements in this communication regarding the proposed
acquisition of TXI by Martin Marietta, the expected timetable for
completing the transaction, benefits and synergies of the transaction,
future opportunities for the combined company and products and any other
statements regarding Martin Marietta's and TXI's future expectations,
beliefs, plans, objectives, financial conditions, assumptions or future
events or performance that are not historical facts are
"forward-looking" statements made within the meaning of Section 21E of
the Securities Exchange Act of 1934. These statements are often, but not
always, made through the use of words or phrases such as "may",
"believe," "anticipate," "could", "should," "intend," "plan," "will,"
"expect(s)," "estimate(s)," "project(s)," "forecast(s)", "positioned,"
"strategy," "outlook" and similar expressions. All such forward-looking
statements involve estimates and assumptions that are subject to risks,
uncertainties and other factors that could cause actual results to
differ materially from the results expressed in the statements. Among
the key factors that could cause actual results to differ materially
from those projected in the forward-looking statements are the
following: the parties' ability to consummate the transaction; the
conditions to the completion of the transaction, including the receipt
of approval of both Martin Marietta's shareholders and TXI's
stockholders; the regulatory approvals required for the transaction not
being obtained on the terms expected or on the anticipated schedule; the
parties' ability to meet expectations regarding the timing, completion
and accounting and tax treatments of the transaction; the possibility
that the parties may be unable to achieve expected synergies and
operating efficiencies in connection with the transaction within the
expected time-frames or at all and to successfully integrate TXI's
operations into those of Martin Marietta; the integration of TXI's
operations into those of Martin Marietta being more difficult,
time-consuming or costly than expected; operating costs, customer loss
and business disruption (including, without limitation, difficulties in
maintaining relationships with employees, customers, clients or
suppliers) being greater than expected following the transaction; the
retention of certain key employees of TXI being difficult; Martin
Marietta's and TXI's ability to adapt its services to changes in
technology or the marketplace; Martin Marietta's and TXI's ability to
maintain and grow its relationship with its customers; levels of
construction spending in the markets; a decline in defense spending and
the commercial component of the nonresidential construction market and
the subsequent impact on construction activity; a slowdown in
residential construction recovery; unfavorable weather conditions; a
widespread decline in aggregates pricing; changes in the cost of raw
materials, fuel and energy and the availability and cost of construction
equipment in
Additional Information and Where to Find It
In connection with the proposed transaction between Martin Marietta and
TXI, Martin Marietta and TXI intend to file relevant materials with the
Participants in Solicitation
This communication is not a solicitation of a proxy from any investor or
securityholder. However, Martin Marietta, TXI and certain of their
respective directors and executive officers may be deemed to be
participants in the solicitation of proxies in connection with the
proposed transaction under the rules of the
Non-Solicitation
This communication shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.
Senior
Vice President, Chief Accounting Officer and Chief Information Officer
or
Corporate
Controller & Treasurer
Source:
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