Five weeks after it began trading on the New York Stock Exchange, Summit Materials has moved to strengthen its largest holding, Missouri-based Continental Cement, through participation in a regulator-driven asset sale tied to the impending Lafarge Group and Holcim Ltd. merger.
A proposed transaction was outlined April 17 in Summit and joint Lafarge–Holcim announcements: In exchange for $450 million in cash and Continental’s Bettendorf, Iowa, terminal, Summit will gain Lafarge North America’s cement plant in neighboring Davenport, Iowa, with 1.2 million tons/year capacity, plus seven Mississippi River terminals from Minneapolis to New Orleans. Summit plans to integrate the Iowa and Mississippi River properties with Continental, whose capacity and distribution footprint would climb to 2.45 million tons/year and eight terminals.
“The [mill and terminals] are an excellent fit with our materials-based growth strategy and a continuation of Summit’s proven track record of value-added acquisitions,” says CEO Tom Hill. “The combination of the Davenport assets and Continental Cement creates a strategically compelling and complementary multi-plant cement business in very attractive markets along the Mississippi.”
Summit and Lafarge project a July closing, hinging on a) Lafarge and Holcim consummating their $40 billion-plus merger that month; and, b) U.S. Federal Trade Commission concurrence with a Lafarge North America and Holcim (US) Inc. asset disposal plan. Lafarge and Holcim noted that the Summit-bound mill and terminals, plus six Holcim (US) sites—Illinois and New Jersey slag cement grinding operations, along with four Illinois, Michigan and Massachusetts terminals—represent assets whose sale has been negotiated with FTC staff. The proposal remains under Commission review. Unlike the Iowa and Mississippi River operations, a prospective suitor for the Holcim (US) properties was not indicated in the Lafarge–Holcim announcement.
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