Knife River another step closer to separation from MDU Resources

MDU Resources Group’s board of directors approved the separation of Knife River Corp., the company’s construction materials subsidiary.

The MDU Resources board issued its approval through a pro rata distribution of the outstanding shares of common stock of Knife River Holding Co., which is the newly formed parent company for Knife River Corp.

“This is a historic day for MDU Resources,” says David Goodin, president and CEO of MDU Resources. “We started our construction materials business with a single aggregate company acquisition in 1992. We have successfully grown Knife River Corp. in 31 years to be one of the top 10 largest sand and gravel producers in the nation – substantial enough to stand on its own as a publicly traded company.”

MDU Resources stockholders will retain their current shares of MDU Resources common stock and, on the distribution date, each MDU Resources stockholder will receive a distribution of one share of Knife River common stock for every four shares of MDU Resources common stock owned as of the record date.

Knife River common stock is expected to be distributed on May 31 to MDU Resources stockholders of record on May 22, the record date for the distribution. Fractional shares of Knife River common stock will not be distributed to MDU Resources stockholders. Instead, they will be aggregated and sold on the open market, with the net proceeds distributed pro rata in cash payments to MDU Resources stockholders who would otherwise have received a fractional share of Knife River common stock.

A “when-issued” public trading market for Knife River common stock is expected to begin on or about May 25 on the New York Stock Exchange (NYSE), continuing through May 31. Upon completion of the distribution, MDU Resources will continue to trade in the regular way on the NYSE under the ticker symbol “MDU.” Knife River will trade in the regular way on the NYSE under the ticker symbol “KNF.”

Following the separation, MDU Resources and Knife River will be independent, publicly traded companies with distinct investment identities, business operations, customers and geographic markets.

“This is a very exciting time for us, and we are in this great position because of the hard work of our 5,700 team members and the generations of Knife River employees who helped build our company into what it is today,” says Brian Gray, Knife River president and CEO. “We have grown our aggregates-based business from a $50 million company in 1992 to $2.5 billion in revenue last year. We are well established, we are confident about our future and we are just getting started.”

First-quarter performance

Separately, MDU Resources reported that its construction materials business experienced a seasonal loss of $41.3 million in the first quarter. That figure compares to a loss of $40 million in the first quarter of 2022.

MDU Resources says higher product pricing largely offset delays from unfavorable weather conditions across the majority of Knife River’s markets. Construction materials EBITDA (earnings before interest, tax, depreciation and amortization) increased $4.1 million in the first quarter as margin improved on aggregates, the company adds.