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Martin Marietta, Vulcan Shareholder Southeastern Backs Merger

Southeastern Asset Management Inc., one of the largest shareholders of both Vulcan Materials Co. (VMC) and Martin Marietta Materials Inc., endorsed a combination of the two sand and gravel companies amid a takeover fight.

Vulcan rose 2.9 percent to $42.83 at 2:53 p.m. in New York trading after Southeastern said in a filing today it supports Martin Marietta’s hostile bid. Martin Marietta, which rose 0.9 percent to $81.38, offered on Dec. 12 to exchange 0.5 share for each Vulcan share, in a swap originally valued at $4.7 billion.

“Southeastern believes the proposed combination can produce substantial economic benefits for both companies and their shareholders,” Memphis, Tennessee-based Southeastern said in the filing.

Birmingham, Alabama-based Vulcan, the largest U.S. producer of sand, gravel and crushed stone, had rejected Martin Marietta (MLM)’s offer, calling it “very low-ball” and saying it takes advantage of a U.S. construction recession. Vulcan has reported net losses in three of the last four quarters for which results were released, and cut its quarterly dividend to 1 cent a share, beginning last month, from 25 cents.

Martin Marietta, based in Raleigh, North Carolina, has said the proposed acquisition would result in $250 million of cost savings and would partially restore the dividend for Vulcan shareholders.

Southeastern, the largest shareholder of Martin Marietta and the Vulcan’s third-biggest, said it sent a letter to Vulcan Chairman and Chief Executive Officer Don James and the rest of the board to urge discussion of the offer with Martin Marietta.

After failing to persuade Vulcan to negotiate, the fund said it has changed its filing status with the Securities and Exchange Commission, with respect to Vulcan, in order to “be more proactive in discussions with the managements and boards of each company, as well as other shareholders.”

Southeastern said today it holds a 13.3 percent stake in Martin Marietta. The fund has a 9.9 percent stake in Vulcan, according to data compiled by Bloomberg, trailing T. Rowe Price Associates with 12.7 percent and Dodge & Cox with 10.9 percent.

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net.

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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