This year has opened with a level of merger and acquisition activity unlike any Concrete Products has seen in nearly six decades of covering ready mixed and manufactured concrete. One record and two major transactions involving big North American ready mixed and precast/prestressed operators are looming. The larger deals, Cemex-RMC (note box below) and Holcim-Aggregate Industries (note page 6), show an increasing need for vertical integration — powder + aggregates + concrete — among cement's global elite. They also reaffirm stable financial prospects for domestic ready mixed production, a business whose past cyclical tendencies had caused investors to shy away.

Comparatively small by dollar amount — about $45 million — the third deal to open 2005, Rinker Materials Corp.-Coreslab International Inc., sees another public company souring on architectural and structural precast. A business whose players once included subsidiaries of aerospace, electrical power, paper and retail giants, precast/prestressed is now the only volume segment of concrete production shifting firmly toward private investors.

Rinker Materials capped 2004 by closing the books on its U.S. prestressed assets, announcing Dec. 31 the planned sale of seven structural and architectural product plants to Coreslab Structures of Burlington, Ont. Valued at about $45 million, the transaction bolsters Coreslab as the North American market leader in project-type precast/prestressed, with 19 U.S. and Canadian plants (map, page 8).

Rinker noted the operations had been underperforming for the past few years as a result of the slowdown in nonresidential construction, and that management had pegged precast/prestressed a non-core business. The company had acquired the seven properties, including sprawling Marshall, Mo., and Bellevue, Neb., sites in various deals since 1989. The Coreslab sale includes former Hydro Conduit and Wilson Concrete sites that were part of larger transactions bearing pipe and underground-precast plants that remain central to Rinker's strategy.

For Coreslab, the properties represent the company's largest transaction to date and ongoing development of a U.S. portfolio launched in 1988. Since then, Coreslab has emerged as the top gun in architectural and structural precast through deals including Southern Prestressed, Featherlite, Stanley Structures and Thomas Concrete properties. The new plants could boost the company to $300 million in annual shipments and construction services.

Not all public companies want precast/prestressed plant assets off the books, but the exceptions are few: National, diversified powerhouse Oldcastle Precast has thrived in wall panel and modular building systems. Along with Hanson Pipe & Products, Oldcastle also has strong regional stakes in prestressed hollow core. Another example that comes to mind is Morse Bros. Prestress division of MDU Resources/Knife River Corp.

But as North American cement, aggregates and ready mixed fall in line with global giants, the market segment known for double tees, AASHTO girders and architectural contracts requiring 50 different sized products is primarily being defined by private concerns that have gained their own type of critical mass. Joining Coreslab at the forefront of this group are other well-regarded operators whose names have surfaced in the past decade of consolidation, especially Cretex, Encon, Fabcon, Gate and High Concrete.

Cemex-RMC delay

Days after the January column (“Cemex-RMC harmonization for the new year”) had gone to press, Cemex S.A. moved back the projected takeover of London-based RMC Group to February due to U.S. anti-trust authorities' delayed review. Cemex had originally planned a Jan. 12 closing on the $5.8 billion deal, following an early December thumbs up from the European Commission.

In a Jan. 6 announcement, Cemex officials noted confidence in the U.S. regulatory review and anticipation of a February closing. As part of the takeover bid last September, Cemex officials underscored the limited overlap in their businesses and RMC's.

e-mail: dmarsh@primediabusiness.com