Strategic and Financial Benefits of Transaction

  • The Leader in the U.S. Aggregates Business: Martin Marietta will become the nation’s largest producer of construction aggregates, supplying the crushed stone, sand and gravel used to build the roads, sidewalks and foundations on which Americans live. The addition of Texas Industries will add approximately 800 million tons of aggregates reserves, bringing the total to over 13.5 billion tons. Texas Industries shipped nearly 15 million tons of sand, gravel and crushed stone during fiscal year 2013. Texas Industries is a major supplier of aggregates in high-growth markets such as Texas, and has long-focused on the synergies available from operating in aggregates as well as cement and ready-mix.
  • Increased Scale, Enhanced Growth Exposure and Vertical Integration in Select Markets: With vertically integrated operations across aggregates and targeted cement, the combined company is expected to be even more competitive. Texas Industries increases Martin Marietta’s presence in the Southwest, with state-of-the-art cement production facilities concentrated primarily in Texas and California – two of the largest and fastest growing markets for construction materials in the United States. The increased scale and geographic diversity resulting from this transaction will provide a broader set of opportunities for organic and inorganic growth. In addition, select vertical integration will improve distribution and transportation costs, diversify end-markets and drive other value enhancing efficiencies. The combined company will also have an outstanding asset base that can deliver superior product offerings and service to customers.
  • Significant Synergy Opportunities: The transaction is expected to generate approximately $70 million of annual pre-tax synergies by calendar year 2017, which would correspond to over $500 million total value creation for shareholders. Key drivers of these synergies include the consolidation of corporate overhead and duplicate functions, enhanced revenue opportunities and increased operational efficiencies through the adoption of best practices and capabilities from each company.
  • Incremental Value Creation through Utilization of NOLs and Potential Real Estate Divestitures: Martin Marietta expects to be able to utilize Texas Industries’ more than $400 million in existing NOLs over the next few years. In addition, the companies believe that there is an opportunity to realize incremental value from the expected divestiture of identified non-operating real estate assets.
  • Financial Strength and Flexibility: The transaction is expected to be immediately accretive to Martin Marietta’s earnings per share in 2014, assuming refinancing of Texas Industries’ outstanding debt at or around the closing of the merger and excluding one-time costs. Martin Marietta expects that at the closing of the merger the combined company will maintain its strong existing credit ratings and have pro forma leverage of less than 3.0 times EBITDA for the 12 months ended December 31, 2014. The combined company will continue to adhere to Martin Marietta’s strict operational and financial discipline and, with improved access to capital, will be well-positioned to pursue a wide range of attractive growth opportunities to continue delivering value to shareholders.
  • Strong Balance Sheet with Solid Cash Flows and Meaningful Dividend: The combined company will maintain a strong balance sheet with significant cash flow, giving it the ability to pay a meaningful quarterly cash dividend. The combined company intends to maintain the dividend at Martin Marietta’s current rate of $1.60 per Martin Marietta share annually, equivalent to $1.12 per Texas Industries share annually, based on the proposed exchange ratio.
  • Enhanced Value for Customers: The size and scale of the combined company will enable Martin Marietta to provide even more value for customers. With a collective workforce of approximately 7,000 highly-skilled employees and a shared commitment to providing exceptional construction materials and the best service and solutions, the combined company will be even better equipped to serve its customers and communities.
  • Greater Employee Opportunity: This combination creates an even stronger base of talent by uniting two highly-skilled workforces with a strong commitment to serving customers and communities. As part of a stronger, larger company, Martin Marietta and Texas Industries employees will benefit from greater career and professional development opportunities created by this transaction.

Management, Board Composition and Headquarters

After the close, the combined company, which will operate under the name Martin Marietta Materials, Inc., will be headquartered in Raleigh, North Carolina and will maintain a significant presence in Dallas.

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