CORRECTION/UPDATE, 1/29/14, 11:45 a.m. EST: This article originally misspelled the name of Cravath associate Andrew Elken. We regret the error. Also, information regarding Kirkland & Ellis’ role on the deal has been added to the article’s final paragraph.
Two years after the collapse of its attempted takeover of rival Vulcan Materials, Martin Marietta Materials said Tuesday it has agreed to pay $2.7 billion to acquire Dallas-based cement-maker Texas Industries.
Terms of the all-stock deal call for Martin Marietta to exchange 0.7 of its own shares for each share of Texas Industries, the Lone Star State’s largest cement producer and a major player in California’s cement market.
Based on Martin Marietta’s Monday closing price, the transaction values Texas Industries at $71.95 per share. Should the deal close as expected in the year’s second quarter—pending the approval of regulators and both companies’ shareholders—Martin Marietta shareholders would own roughly 69 percent of the combined company and Texas Industries shareholders would own the balance.
Already the country’s second-largest producer of construction aggregates—a category that includes materials such as crushed stone, sand and gravel—Raleigh-based Martin Marietta expects the Texas Industries acquisition to help it compete with industry leader Vulcan. Martin Marietta’s $5.1 billion hostile bid to acquire Vulcan in 2011 led to a drawn-out legal battle between the two companies that wound up in Delaware Chancery Court, where the attempted takeover died the following year. (Though The Wall Street Journal reported in late 2012 that Martin Marietta was considering a friendly bid for Vulcan in the wake of an injunction against it being lifted, no deal ever materialized.)
The Texas Industries purchase is also likely to help Martin Marietta expand its presence in California and Texas—the country’s two most populous states—where most of the target company’s cement plants are located. Bloomberg notes that Martin Marietta hopes to take advantage of a rebound in home construction by tapping into the housing markets in those two states.
Cravath, Swaine & Moore is advising Martin Marietta on the deal with a team that includes M&A partners Scott Barshay and George Schoen. Executive compensation and benefits partner Eric Hilfers, tax partner Andrew Needham and environmental law partner Matthew Morreale also advised on the deal. Cravath associates Jacquelyn Arcati, Andrew Elken, Jarrett Hoffman and Kara Mungovan are working on the deal, as are environmental law senior attorney Annmarie Terraciano and real estate practice area attorney Joyce Law. Also working on the deal are Debra Aboodi, Sara Lykken and Julia Onorato—Cravath associates who have not yet been admitted to the bar. Roselyn Bar, a former attorney at Skadden, Arps, Slate, Meagher & Flom, is Martin Marietta’s general counsel. (Skadden advised the company on its unsuccessful hostile bid for Vulcan.)
Davis Polk & Wardwell is representing J.P. Morgan Securities, Barclays Capital and Deutsche Bank Securities in their roles as financial advisers to Martin Marietta on the acquisition. Davis Polk’s team includes corporate partner Phillip Mills, along with associates Boyoon Choi and Brian Wolfe.
Texas Industries, meanwhile, has hired a firm with experience dealing with Martin Marietta: Wachtell, Lipton, Rosen & Katz. As outside counsel to Vulcan, Wachtell squared off against Martin Marietta in the legal fight spawned by the latter’s hostile bid three years ago.
Wachtell is now serving as Texas Industries’ lead outside counsel on the sale to Martin Marietta with a team led by corporate partner Mark Gordon. Corporate partners Gordon Moodie and Daniel Neff are also advising, as are tax partner T. Eiko Stange, executive compensation and benefits partner Adam Shapiro and antitrust partner Nelson Fitts. Wachtell associates on the deal are S. Iliana Ongun, Richard Ross, Michael Sabbah and Michael Schobel.
Former Akin, Gump, Strauss, Hauer & Feld partner Frederick Anderson serves as the top in-house attorney for Texas Industries.
