Eagle Materials Board: One company better than two

Sources: Eagle Materials Inc., Dallas; CP staff

Sterling fiscal 2021 results, portfolio-streamlining measures, successful integration of Cemex USA cement plant and distribution assets valued at $665 million, plus market changes favoring critical corporate mass, underpin the tabling of a plan to split Eagle Materials into two separate, publicly traded companies. A 2019 strategic portfolio review, partly triggered by an activist investor, spawned a proposal for two entities encompassing the presently grouped Heavy Materials (cement, aggregates, concrete) and Light Materials (gypsum wallboard and paperboard) businesses. 

“Eagle is exceedingly well-positioned and performing as well as at any time in its history. Both major business segments continue to post industry leading results on just about every measure,” affirms Chairman Mike Nicolais. “While the Board will continue to evaluate the merits of a separation on a periodic basis, it has concluded, in consultation with external advisors, that the combined company is in the best position to create long-term shareholder value.”

Much has transpired to prompt directors’ reevaluation of the proposed split’s merits, he adds: First, the size and financial strength of the company, with robust balance sheet plus diversified Heavy Materials and Light Materials asset base and geographical footprint, “have provided great comfort, stability and value to shareholders, employees, customers and suppliers during an unprecedented and uncertain time.” Second, given the continued consolidation in portland cement and wallboard production, coupled with rigorous examination of a number of strategic alternatives since the proposed split announcement, the board sees a combined company with greater financial scale and flexibility as better positioned to pursue key strategic growth options and enhance shareholder value. Finally, Eagle Materials has trimmed its portfolio, divesting the Oil and Gas Proppants business, along with non-core concrete and aggregates assets. 

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