Texas Industries, Inc. is approaching its annual shareholders meeting, Oct. 22 in Dallas, poised to counter a flimsy argument for board realignment, including ouster of three incumbent directors up reelection to three-year terms
By Don Marsh, Editor
Texas Industries, Inc. is approaching its annual shareholders meeting, Oct. 22 in Dallas, poised to counter a flimsy argument for board realignment, including ouster of three incumbent directors up for reelection to three-year terms.
Between November 2008 and July 2009, Burbank, Calif.-based Shamrock Activist Value Fund (SAVF) has acquired shares representing a 10.2 percent TXI stake; Securities and Exchange Commission filings suggest the bulk were purchased in the $29Ò$32 range, climbing in the market rebound to $40Ò45. Still, SAVF officials have waged a campaign to seat an opposition slate of three directors at the meeting and change the director election cycle. They have also challenged TXI’s timing of $750 million in capital investments since 2005, including a $427 million Oro Grande cement mill overhaul in southern California, completed earlier this year.
The huge outlays are aimed at plant modernization and a powder capacity increase from 5 million to nearly 8 million tons/yearÛhardly a questionable strategy for a domestic operator bent on staying relevant in an age of global cement commerce. In a perfect world, TXI could neatly time expansion with escalating powder demand. In the real world, inconvenient variables like permitting (California anyone?) or plant construction material spikes ($teel) prevail.
SAVF cites TXI’s lagging recent financial performance against New York Stock Exchange-traded peers. In investor circles, the company belongs in the same sector as Eagle Materials, Martin Marietta Materials and Vulcan Materials; however, each has sufficiently different portfolios of cement, aggregate and concrete assetsÛenough to make recent financial performance an apples-and-oranges comparison.
One benchmark for TXI shareholders to consider is where the company and its peers are trading today versus 2007 peaks tied to takeover speculation amid the pricey Cemex-Rinker, Heidelberg-Hanson, and Vulcan-Florida Rock mergers.
| MAY-JUNE | OCTOBER | |
|---|---|---|
| STOCK | 2007 | 2009 |
| TXI | $87 | $45 |
| Eagle | $51 | $27 |
| Martin Marietta | $168 | $96 |
| Vulcan | $120 | $55 |
Wall Street did not discriminate against TXI at market peak, even though the company was on the brink of a costly capital program certain to weigh on financial performance for at least the remainder of the decade. It’s doubtful these figures have escaped SAVF officials, who will nonetheless attend the annual meeting backed by three other major shareholders and a voting block of at least 34.5 percent favoring the opposition director slate and bylaws changes.
Read full editorial from October Concrete Products