Vulcan challenges merger-minded Martin Marietta on profits, prospects, assets

Sources: Vulcan Materials Co., Birmingham, Ala.; CP staff

In an updated investor presentation reinforcing its objections to Martin Marietta Materials’ hostile, stock exchange offer, Vulcan cites market, operating and product-pricing metrics where it excels against its would-be merger partner, coupled with differences between each company’s asset values.

It prepared the presentation in advance of the Vulcan annual shareholders meeting in May, when Martin Marietta’s exchange offer (0.5 share for each Vulcan share) expires, and prospective meetings this month during which Martin Marietta would address Department of Justice/Antitrust Division concerns over a proposed merger’s market concentration effects. To enlighten shareholders of its reserves riches and management track record, Vulcan contends:

  • Its aggregates assets lie in faster-growing markets than those of Martin Marietta. Projected population growth figures from 2010–2020 in each company’s top-five states indicate: Vulcan, 16.1 million, or 75 percent more than Martin Marietta, 9.2 million.
  • It serves 18 of the top 25 U.S. metropolitan areas ranked by projected population growth versus nine for Martin Marietta.
  • It has consistently achieved higher aggregates price performance since 2006: Vulcan, 5.0 percent compounded annual growth rate versus Martin Marietta, 3.6  percent. Measuring 2011 cash gross profit unit margin, Vulcan realized $4.08 per ton of aggregates, or 32 percent above Martin Marietta, $3.10 per ton.
  • Its operating leverage, key to EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) growth as markets recover, was demonstrated in the 2003–2006 recovery, when Vulcan earnings grew by $555 million, or 70 percent compared to Martin Marietta, $193 million, or 57 percent. With early signs of market recovery, fourth quarter 2011 saw Vulcan realize a $23.6 million gross profit gain against the same period in 2010 versus Martin Marietta’s $1.3 million gain.

In addition, Vulcan reports that its non-aggregates businesses—chiefly ready mixed concrete production and cement production or distribution in markets including Virginia, Florida and California—are at cyclical troughs and have considerable upside potential. The full shareholder presentation is posted at