Sources: Vulcan Materials Co., Birmingham, Ala.; Martin Marietta Materials, Raleigh, N.C.; CP staff
Martin Marietta’s proposed union with Vulcan Materials has hit a roadblock in Delaware Chancery Court, where the latter company challenged measures its would-be suitor took leading to a December 2011 stock exchange offer.
Court proceedings earlier this year centered on Vulcan’s charge that Martin Marietta violated confidentiality agreements the companies entered upon potential merger discussions in 2010. Determining violation of those agreements, Chancellor Leo Strine, Jr. has enjoined Martin Marietta for four months from prosecuting a proxy contest, making an exchange or tender offer, or otherwise taking steps to acquire control of Vulcan Materials shares or assets.
“We appreciate the Court’s careful consideration of this matter and are pleased with the decision,” Vulcan noted in a statement. “Our Board and management team remain focused on enhancing value for all Vulcan shareholders, including through the aggressive implementation of the Profit Enhancement Plan and Planned Asset Sales that we announced in February. As demonstrated by strong performance over the last two quarters, Vulcan is well positioned for growth, with superior aggregates operations and operating leverage.”
The decision sidetracks a proxy for the June 1 Vulcan annual shareholders meeting, where Martin Marietta aimed to have its four nominees elected to the board. Vulcan has countered with its own slate of director nominees, questioning the Martin Marietta candidates’ independence, and maintaining as inadequate the exchange offer, 0.5 Martin Marietta share for each Vulcan share. At that ratio, Martin Marietta contends, Vulcan shareholders would have a 58 percent stake in the merged company.
In a statement on the Delaware court decision, Martin Marietta cited its continued belief “in the undeniable strategic merits of a business combination with Vulcan” and its intent to pursue an appeal and to seek a stay of the Court’s ruling pending the outcome. “If we are successful in the appeal process, we expect that the independent candidates nominated by Martin Marietta will stand for election at the Vulcan annual meeting and that we will continue to pursue our exchange offer for Vulcan shares,” the company affirms. “If we are not successful, we may be required by the terms of the Delaware order to suspend our activities with respect to the proposed business combination with Vulcan for four months.”