Martin Marietta Materials Inc. said its takeover bid for Vulcan Materials Co. won’t be dissuaded by the “intemperate rhetoric” of a court filing in which the target company says its board is unlikely to approve the hostile offer in the foreseeable future.
Martin Marietta announced an all-stock bid for Vulcan last week that was valued at about $4.7 billion on Dec. 12. The offer is being made directly to investors after Vulcan, the largest U.S. producer of crushed stone, broke off talks on combining, Martin Marietta has said.
The filing’s statement that one of the offer’s requirements, approval by Vulcan’s board, “has no likelihood of being satisfied any time in the foreseeable future, if ever,” indicates a refusal to hold talks contrary to Vulcan investors’ best interests, Martin Marietta Chief Executive Officer Ward Nye said in a Dec. 17 letter to Vulcan’s board.
“Our strong preference is to negotiate an agreement with Vulcan that will benefit both sets of shareholders,” Nye wrote. “We are not dissuaded by what may be intemperate rhetoric of litigation.”
Martin Marietta is seeking a court order in New Jersey declaring that only a simple majority vote is required to approve a merger, according to Vulcan’s filing Dec. 16. Vulcan said in the filing that Martin Marietta’s lawsuit is “so palpably deficient that the court should dismiss it.”
Douglas Eakeley, a lawyer for Vulcan, confirmed the filing by the company. The filing couldn’t be independently confirmed with the court.
Reviewing the Offer
The filing’s characterization of the bid as an attempt to “snatch Vulcan for the lowest possible price” is inaccurate, the CEO wrote. Nye said he was concerned the papers imply the transaction has been rejected, even though Vulcan’s board hasn’t publicly stated its position on the proposal. Vulcan said in a Dec. 12 statement that its board is reviewing the offer and would make a recommendation to shareholders within 10 working days.
Mark Semer, an outside spokesman for Martin Marietta at Kekst & Co. in New York, didn’t return a voice-mail message seeking comment on the filing and statement. Meghan Stafford, an outside spokeswoman for Vulcan, declined to comment.
Martin Marietta has also sued Vulcan in Delaware Chancery Court in Wilmington. It asked a judge in its Dec. 12 complaint to declare that a May 3, 2010, non-disclosure agreement between the two “does not prohibit Martin Marietta’s public offer to purchase all issued and outstanding shares of Vulcan’s common stock in exchange for Martin Marietta’s stock.”
That suit also seeks a ruling that allows Vulcan stockholders “to vote for the election of Martin Marietta’s five independent nominees” to Vulcan’s board.
The combined companies would create the world’s largest aggregates supplier. Robert Wetenhall, an analyst with RBC Capital Markets in New York, told Bloomberg News on Dec. 12 that Vulcan has the “best portfolio” of reserves in North America.
Martin Marietta, the second-largest producer of crushed stone, gravel and sand in the U.S., is offering 0.5 shares for each share of Birmingham, Alabama-based Vulcan. Martin Marietta is based in Raleigh, North Carolina.
The offer follows losses for Vulcan in three of the past four quarters amid a U.S. construction recession.
The bid was a 15 percent premium to the average exchange ratio based on the closing share prices for Vulcan and Martin Marietta for the 10 days ended Dec. 9, Martin Marietta said.
On Dec. 16, Martin Marietta rose 1.3 percent to $74.44. Vulcan’s shares climbed 0.3 percent to $38.78, which is 4.2 percent higher than 0.5 percent of Martin Marietta’s closing price of $74.44.
The case is Martin Marietta Materials Inc. v. Vulcan Materials Co., C-83-11, Superior Court of New Jersey, Chancery Division, Mercer County.