Sources: U.S. Federal Trade Commission; CP staff
A Federal Trade Commission Mergers staff and Bureau of Economics investigation has prompted CalPortland Co. to abandon a proposed $350 million deal for Martin Marietta Materials’ Tehachapi cement plant near the foot of California’s Central Valley.
“The transaction would have reduced the number of cement suppliers in southern California from five to four, further concentrating an already concentrated market, and was presumptively illegal,” contends FTC Bureau of Competition Director Holly Vedova. “The abandonment preserves competition for a key component of southern California’s construction and infrastructure industries.”
CalPortland and parent company, Taiheiyo Cement Corp. of Japan, proposed in August 2022 to acquire the Tehachapi plant plus distribution terminal and other assets from Martin Marietta. The latter inherited the operations in a 2021 deal for the Lehigh Hanson West Region, an integrated cement, aggregates and ready mixed business serving California, Arizona, Nevada and Oregon markets. In early 2022, CalPortland acquired the former Lehigh Hanson Redding cement mill in northern California, plus associated terminals and ready mixed concrete plants, from aggregates-driven Martin Marietta. The Tehachapi plant agreement followed five months later. If consummated, FTC officials argue, CalPortland would have owned half of the cement plants serving southern California.
Their observation ignores domestic capacity and import terminal math and suggests the plant serves markets only to the south. At 1 million tons/year output potential, Tehachapi stood to contribute a certain level of back up to CalPortland’s two other operations serving southern California: Oro Grande, 2 million tpy and Mojave, 1.65 million tpy. The remaining cement plants that FTC investigators presumably factor into their southern California market survey are Cemex USA, Victorville, 3.2 million tpy; Mitsubishi Cement Corp., Lucerne Valley, 1.8 million tpy; and, National Cement Company of California, Lebec, 1.6 million tpy. Ports of Long Beach and San Diego import terminals add to the market’s cement supply chain.
All plant capacity figures are from the Cement Products 2023 North American Cement Directory.