Soaring Valuations

Financial prospects for concrete, cement and aggregate operators continue to draw the attention of private equity firms like Audax Group, as well public-company

Financial prospects for concrete, cement and aggregate operators continue to draw the attention of private equity firms like Audax Group, as well public-company investors on Wall Street. The week after Audax announced the sale of its Ready Mixed Concrete Co. stake, investors drove the stock of mainline concrete, cement and aggregate companies to new peaks. Shares in U.S. Concrete, Hanson Plc, Lafarge North America, Martin Marietta Materials and Vulcan Materials reached all-time or five-year highs. Companies whose stock has been trading less than five years Û high fliers Eagle Materials and Rinker Group Û also saw shares trading at record levels.

Between early January and mid-March, the seven companies’ stock rose an average of 35 percent. The company with the largest share price jump, Lafarge NA ($55 to $84, or 53 percent), has been the target of a late-February tender offer from majority shareholder Lafarge Group. Throughout last month, Lafarge NA stock traded north of the Group’s $75/share tender offer, which was to expire April 3. Two other companies skewing the year-to-date curve upward are Eagle Materials and U.S. Concrete, each of which Û through late March Û saw shares climb about 45 percent since 2006 trading opened. The impressive gains this year are on top of a solid 2005, when concrete, cement, and aggregate companies’ stock climbed 27 percent.