Here we go again

By |  September 21, 2012

After spending the first half of this year at the top of our news pages, the story of Martin Marietta Materials’ bid for Vulcan Materials had fallen from the spotlight. Well, it’s back. When a judge put a four-month hold on the deal in May, many suggested the takeover attempt was dead. But that’s not case, as a Bloomberg story at press time illustrates.

The four-month hold has expired, and two prominent Vulcan Materials shareholders, Bloomberg reports, are calling for Martin Marietta to renew its offer. The news agency says Arthur Barry, a fund manager at Loomis Sayles & Co., claims his firm would welcome a new bid. And Guy Mitchell, a member of one of Vulcan’s founding families, would also favor another try.

Mitchell says if he were Martin Marietta, he’d re-launch the tender offer and let the shareholders vote on it. When Delaware Chancery Court Judge Leo Strine made his decision in May, it prevented a June 1 vote by Vulcan shareholders on four Martin Marietta nominees to Vulcan’s board. Barry says such a vote would have been a good gauge of support for the deal.

Will it happen?
Will, and should, the deal happen? It depends on which analysts you ask.

The report quotes one analyst who says it makes sense for the companies to be combined, but Martin Marietta may need to up its price.

Another analyst points out that the deal also faces antitrust scrutiny from the U.S. Justice Department, which could force the combined company to sell assets. That analyst, says Bloomberg, doesn’t expect the deal to happen. Another Martin Marietta investor said a deal still makes sense if a Justice Department review doesn’t result in a large sale of assets.

At press time, Martin Marietta’s stock price hit a new 52-week high, trading at $92.62. Shares are up 15.2 percent year-to-date.

And the latest report from Bloomberg before we went to press suggested that the company may need to boost its initial offering by 40 percent to make a deal happen. Despite a public relations barrage by both companies to the public, press and shareholders, both Martin Marietta and Vulcan have declined to comment since the hold on the deal has been lifted.

-Darren Constantino

Comments are closed