Sources: Summit Materials Inc., Denver; CP staff
In a July 17 transaction with LafargeHolcim Ltd., Summit Materials acquired Lafarge North America’s Davenport, Iowa cement plant, along with a West Des Moines, Iowa, and six Mississippi River terminals. The companies announced the deal just ahead of an early-May U.S. Federal Trade Commission order stipulating plant and terminal sale within 10 days of the Lafarge S.A. and Holcim Ltd. merger, consummated July 8.
In addition to cash payments—$370 million upfront, $80 million by year’s end— Summit is transferring a Bettendorf, Iowa, terminal to LafargeHolcim. (As noted below, LafargeHolcim is selling another terminal in Rock Island, Ill., directly across the Mississippi from Davenport and Bettendorf, in a separate FTC-ordered transaction.) The Bettendorf property is part of Summit’s largest holding, Continental Cement Co. LLC, into which the Davenport mill and New Orleans to St. Paul–Minneapolis terminal network are being integrated. The newly acquired operations complement Continental Cement’s Hannibal, Mo., plant and St. Louis terminal. Following the transaction, Summit owns 2.4 million short tons of cement production capacity across the two mills, plus eight cement distribution terminals along the Mississippi River system.
The acquisition, notes Summit CEO Tom Hill, “Roughly doubles our cement capacity and firmly establishes our position as a top three cement producer on the Mississippi River. We are excited to integrate these low-cost, efficient operations into our platform as we look to continue enhancing our materials earnings exposure and overall profitability. We expect this transaction to be immediately accretive to earnings with additional upside to our profitability as we implement operational best practices and realize synergies across our expanded cement business.”
The acquisition expands a strong Midwest position, accelerates growth into several new markets, and is another milestone in Continental’s history of supplying cement to an increasing base of customers, dating back to 1903, adds Continental Cement President Tom Beck.
Beyond the Summit transaction, LafargeHolcim is bound by the FTC order to consummate within the 10-day timeframe three other transactions, each involving sale of Holcim (US) Inc. assets to agency-approved buyers: Buzzi Unicem USA, (the above-noted) Rock Island, Ill., plus two Michigan terminals; Eagle Materials, Chicago Skyway slag cement plant; and, Essroc Cement Corp., Camden, N.J., slag cement plant and Everett, Mass., terminal. The FTC has ordered LafargeHolcim to unload within 120 days additional Holcim (US) assets, all tied to sale of the entire Holcim (Canada) Inc. cement, concrete and aggregate portfolio to Oldcastle Inc. parent CRH Plc.
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