NEW YORK ( TheStreet) -- Martin Marietta Materials (MLM) said it would buy Vulcan Materials (VMC) for $4.6 billion, creating a combined the construction materials and asphalt giant with an enterprise value of $11.4 billion.
In the all-stock share offer, Vulcan will tender its shares at a ratio of 0.5 of each Martin Marietta share, in spite of recording nearly double its competitors $1.8 billion in annual sales. The combination values Vulcan at $36.69 a share, a 15% premium to the average closing price of its shares in the last 10 days. On news of the deal, Vulcan shares raced past the offer price to over $40 a share.
If Vulcan shareholders were to approve the hostile merger bid by Martin Marietta, it would create a global and North American leader in construction aggregates, holding mineral reserves of 28 billion tons. In a statement announcing the deal, Martin Marietta said it would also expect $200 million to $250 million in synergies through a combination.
Both companies are leaders in construction aggregates, the crushed stone, sand and gravel that is key in the construction of roads, sidewalks and building foundations. For Martin Marietta, a Vulcan merger would be its biggest ever deal.The combined construction aggregates giant would eclipse competitors like MDU Resources (MDU) and Valmont Industries (VMI) with over 4.3 billion in annual sales. Materials giant Owens Corning (OC) is also a competitor in some markets. Vulcan shares rose nearly 20% to $40 a share in trading on news of the offer. Its shares were off nearly 30% year-to-date prior to the deal announcement on a waning outlook for the still struggling construction industry and continued losses. Martin Marietta shares rose over 5% to $77.36 in early trading.
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