The Vulcan Materials company (NYSE: VMC) board of directors unanimously agreed that the exchange offer from Martin Marietta Materials Inc. (NYSE: MLM) to acquire Vulcan at a fixed ratio of 0.50 shares of Martin Marietta common stock for each Vulcan common share is inadequate and not in the best interests of Vulcan and its shareholders. The board strongly recommends that shareholders not tender any shares to Martin Marietta.
"Our board's position is clear – shareholders should reject Martin Marietta's lowball and opportunistic exchange offer," said Donald M. James, chairman and CEO of Vulcan Materials. "The offer, made at a low point in the economic and industry cycle, does not come close to appropriately compensating shareholders for Vulcan's strategic locations and leading positions in high growth markets, unparalleled reserve base, and proven ability to deliver rapid profitability and cash flow growth in economic recoveries. Martin Marietta is obviously trying to take value that rightly belongs wholly to Vulcan shareholders."
The Vulcan board concluded that the company is much better positioned to capitalize on economic recovery than Martin Marietta. Vulcan has a stronger presence in the most attractive U.S. markets and a significantly more profitable aggregates business. It also noted that Martin Marietta's offer carries significant execution risk, further eroding the value of the offer. While the company had explored a possible combination with Martin Marietta in the past, it ultimately determined that a combination was not in the best interests of the company or its shareholders, as detailed in Vulcan's 14D-9 filing today.
Among the specific reasons cited in Vulcan's Schedule 14D-9 for recommending that shareholders reject the Martin Marietta offer are the following: