Martin Marietta Launches Hostile Bid for Competitor Vulcan (MLM, VMC)
Construction materials company Martin Marietta Materials Inc. (NYSE: MLM) has launched a hostile takeover bid for larger rival Vulcan Materials Corp. (NYSE: VMC). The deal would be a tax-free exchange of 0.50 shares of Martin Marietta for every outstanding share…
Construction materials company Martin Marietta Materials Inc. (NYSE: MLM) has launched a hostile takeover bid for larger rival Vulcan Materials Corp. (NYSE: VMC). The deal would be a tax-free exchange of 0.50 shares of Martin Marietta for every outstanding share of Vulcan stock. At last Friday’s closing price, the offer represents a 15% premium for Vulcan shareholders.
The chairman/CEO of Vulcan would remain as the chairman of the combined company and the CEO of Martin Marietta would become the CEO/President of the new firm. The combined company would also get a new name.
To sweeten the deal for Vulcan shareholders, Martin Marietta proposes to maintain its current dividend, the effect of which it spells out:
[I]t is our objective to maintain the dividend at Martin Marietta’s current rate ($1.60per Martin Marietta share annually, equivalent to $0.80 per Vulcan share annually, based on the proposed exchange ratio). In light of Vulcan’s recent decrease in its dividend (to$0.04 per Vulcan share annually), we believe Vulcan’s shareholders will find this aspect of the proposal attractive.
Vulcan has not yet responded to the offer.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
