Sources: CP staff; Vulcan Materials Co., Birmingham, Ala.; U.S. Department of Justice
Vulcan Materials closed its planned $900 million acquisition of 36-site Aggregates USA on the final business day of 2017, along with a companion $290 million transaction through investor Blue Water Industries. The latter involves the sale of 17 Tennessee and Virginia quarries and yards, and abides a Department of Justice Antitrust Division settlement addressing coarse-aggregate production overlap between Vulcan and Aggregates USA in southwest Virginia, plus the Knoxville and Tri-Cities, Tenn., markets. Vulcan will assimilate the remainder of the portfolio—three Georgia quarries and 16 rail distribution yards in Georgia, Florida and South Carolina—into its Southeast platform.
DOJ Antitrust officials proposed the settlement after determining that the combined Vulcan-Aggregates USA businesses would violate the Clayton Act, which sets product and market concentration criteria in merger and acquisition review. Agency officials defined state department of transportation-qualified coarse aggregate as a relevant product market, where the product has narrowly defined properties and few, if any, substitutes in many concrete and asphalt applications. They then painted the three areas the former Aggregates USA operations serve as relevant geographic markets, and questioned how many prospective aggregates producers could compete with Vulcan and Aggregates USA quarries from outside the Abingdon, Va., plus Knoxville and Tri-Cities markets.
“For many customers, a combined Vulcan and Aggregates USA will have the ability to increase prices for DOT-qualified coarse aggregate,” the DOJ complaint contends. “The combined firm could also decrease service for these same customers by limiting availability or delivery options … The proposed acquisition will substantially lessen competition in the market for the production and sale of DOT-qualified coarse aggregate in the relevant areas.”
DOJ’s concurrently filed complaint and proposed settlement remain subject to U.S. District Court for the District of Columbia approval. Settlement terms positioned Vulcan, Aggregates USA owner SPO Partners and Blue Water Industries to book their transactions in 2017.
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