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Delaware Court Explains Martin Marietta-Vulcan Ruling

The Delaware Supreme Court expanded on a May 31 ruling from the bench, concluding in a written opinion that a lower court properly found Martin Marietta Materials Inc. couldn’t proceed with a hostile takeover of rock-crushing rival Vulcan Materials Co.

“It is undisputed that the confidentiality agreements in this case were true confidentiality agreements,” violated by Martin Marietta, the justices said in a 42-page explanatory opinion released yesterday.

The agreements “did not categorically preclude Martin from making a hostile takeover bid for Vulcan,” the justices wrote. “What they did was preclude Martin from using and disclosing Vulcan’s confidential, nonpublic information.”

After amicable merger talks broke off, Raleigh, North Carolina-based Martin Marietta in December offered to exchange half a share for each share of Birmingham, Alabama-based Vulcan in a $4.7 billion deal that would have created the world’s largest producer of sand, gravel and crushed stone.

The companies sued each other over the hostile bid, and in an opinion May 4 after a non-jury trial, Delaware Chancery Court Judge Leo Strine Jr. decided that Martin Marietta didn’t comply with confidentiality provisions and said it couldn’t pursue Vulcan for four months.

Martin Marietta appealed and the Delaware Supreme Court agreed with Strine after a May 31 hearing.

‘Unambiguous Terms’

In explaining that ruling, the justices said Martin Marietta’s argument “rests upon a somewhat intricate (and fragile) structure,” in the face of “unambiguous terms” of the contract.

Jamie Tully, a Vulcan spokesman, in an e-mailed comment reiterated a company statement from May, lauding the decision and the “court’s careful consideration” and saying management is “committed to enhancing long-term value” for shareholders.

Andrea Calise, Martin Marietta spokeswoman, didn’t immediately return phone and e-mail messages seeking comment on the opinion.

The case is Martin Marietta Materials Inc. v. Vulcan Materials Co., CA7102, Delaware Chancery Court (Wilmington).

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