NEW YORK ( TheStreet) -- Martin Marietta Materials ( MLM - Get Report) said it would buy Vulcan Materials ( VMC - Get Report) 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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Vulcan's biggest shareholders are T. Rowe Price and Dodge & Cox, each with 10% -plus stakes. Southeastern Asset Management and State Farm each hold 9%-plus stakes in Vulcan as well, according to Securities and Exchange Commission filings compiled by Bloomberg.

Under the share exchange offer, each outstanding share of Vulcan will be exchanged for 0.50 Martin Marietta share, according to a press statement, which also signaled that Martin Marietta would maintain its $1.60 a share annual dividend.

The merger bid is a finalization of a nearly two years of negotiations. "We are bringing our proposal directly to Vulcan's shareholders after Vulcan ceased participating in private discussions toward a negotiated transaction, which commenced over a year and a half ago," Martin Marietta Chief Executive Ward Nye said.

Martin Marietta earned nearly $100 million in 2010 profits, but has earned just over $50 million nine months into 2011. Last year Vulcan lost just over $100 million and is on track for a loss in 2011. Vulcan's revenue also slowed to $2.6 billion in 2010, after reaching pre-crisis highs above $3.3 billion.

Prior to the real estate crash and construction slowdown, Vulcan expanded aggressively, taking on $3.1 billion in debt buy construction company Florida Rock in 2007.

In December, the Department of Commerce said that October construction spending in the U.S. fell compared to levels at the same time in 2010. Ten months into 2011, construction spending of $655.5 billion is 2.9% below levels seen last year.

Through consolidation and operational synergies Martin Marietta and Vulcan expect that the merger will bolster their results, even as construction still lags. "Recent events, including the fragile state of the U.S. economy, the lack of visibility as to when a sustainable recovery will take place, and the uncertainty surrounding government spending on infrastructure projects, only strengthen the rationale behind a combination," Martin Marietta wrote in a letter announcing the deal.

-- Written by Antoine Gara in New York