Martin Marietta Materials, Inc.
Texas Industries, Inc.
) recently announced that Martin Marietta has reached a settlement
with the U.S. Department of Justice (DOJ) to address all
competition issues concerning its proposed acquisition of Texas
Per the agreement with DOJ, Martin Marietta must divest its North
Troy aggregate quarry in Mill Creek, OK and its two rail yards
sites in Dallas and Frisco, TX to complete the $2.7 billion deal
which was announced on Jan 28.
Martin Marietta Materials had entered into a definitive merger
agreement in Jan 2014 under which Martin Marietta agreed to acquire
all the outstanding shares of Texas Industries, a manufacturer of
heavy construction materials in Southwestern U.S.
According to the agreement, Texas shareholders will receive 0.7
Martin Marietta shares against every Texas share they own, valued
at $71.95 at Martin Marietta's closing stock price on Jan 27, 2014
According to the latest agreement with the DOJ, the waiting period
related to the merger under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 will be terminated. The completion of the
acquisition however still requires approval from shareholders of
both Martin Marietta and Texas Industries.
Headquartered in Raleigh, NC, the combined company will be headed
by Ward Nye and the Martin Marietta executive team.
With the completion of the acquisition, Martin Marietta is expected
to become the largest producer of construction aggregates and heavy
building materials, which includes crushed stone, sand and gravel.
Texas Industries will add about 800 million tons to Martin
Marietta's aggregate reserves and access to high end markets such
The merger between the two companies will also result in vertical
integration across aggregates and targeted cement, which will
increase productivity and scale of production. The combined company
will benefit from an increase in geographic diversity and combined
access to a larger market.
As the housing market recovers further, pent up demand for new
homes is expected to unleash. The recent merger will benefit from
the current market scenario.
Martin Marietta Materials carries a Zacks Rank #3 (Hold).
Investors interested in the building construction/building products
sector can consider stocks like
TRI Pointe Homes, Inc.
). Both the companies hold a Zacks Rank #2 (Buy).
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