Hanson PLC, the international building materials company, has signed a contract to acquire Material Service Corp. from General Dynamics Corp. for $300 million in cash. Completion of the acquisition, which is subject to final due diligence and regulatory approval, is anticipated to occur in the second quarter of 2006.
Headquartered in Chicago, Material Service is the 13th largest producer of aggregates in the United States. Established in 1919 by the Crown family, it merged with General Dynamics in 1959. Material Service employs more than 800people and operates 10 crushed stone quarries and three sand and gravel quarries. The company's primary market is Illinois, including the greater metropolitan area of Chicago. Illinois is the fifth largest aggregates market in the United States. Three of the crushed stone locations are in western Indiana.
Material Service is ranked first or second in all of the markets it serves. In 2005, it sold more than 20 million tons of aggregates and is estimated to have about 1.5 billion tons of aggregate reserves. In FY 2005, Material Service's audited sales revenue was about $160 million, gross assets were approximately $120 million and EBITDA was approximately $40 million.
This acquisition should increase Hanson's annual aggregates volume in the United State by about 15 percent and reinforces Hanson's position as one of the leading U.S. aggregates producers. The acquisition is expected to be earnings enhancing for Hanson in the first full year of ownership and will be financed from existing borrowing facilities.
Jim Kitzmiller, president of Hanson Aggregates North America, says, "This is an important acquisition for Hanson, taking us into Illinois for the first time and extending our presence in Indiana. Adding Material Service's people and assets to our group provides new and exciting opportunities for further development in the north central U.S. area."
Alan Murray, chief executive of Hanson PLC, says, "Material Service has a long history as a premier construction materials company. This acquisition strengthens our U.S. footprint and reinforces our position as one of the leading aggregates producers in the USA."
