Martin Marietta Materials, Inc. (NYSE: MLM) today issued the
following statement in response to the new shareholder presentation
released by Vulcan Materials Company (NYSE: VMC).
“Vulcan’s shareholder presentation suffers from numerous
inaccuracies and mischaracterizations, which we will address
promptly. Most importantly, the basic theme – the past is prologue
to the future – is fundamentally flawed.
“Pointing to past cyclical recoveries in this industry, Vulcan’s
presentation touts its performance on historical recoveries but in
footnotes Vulcan admits that ‘historical performance is not a
guarantee or assurance of future performance nor that previous
results will be attained or surpassed.’
“This last statement recognizes the reality that today’s Vulcan
is not the same company that came through the past cyclical
recoveries. Specifically, Vulcan today – and on a standalone basis
going forward – is burdened with:
- A highly levered balance sheet;
- Cash constraints—which required the
virtual elimination of its dividend;
- A "junk" credit rating;
- A steadily falling unaffected stock
price—reflecting Vulcan’s risk profile and lack of
profitability;
- A "too little, too late" cost reduction
program—which itself is fundamentally misconceived;
- And most significantly, no clear
prospect, as to either timing or level, of the life-line it is
looking to for rescue of its standalone future value (inadvisably
in light of the circumstances)—a strong and sustained economic
recovery.
“In short, Vulcan fails to factor into its overstated view of
its potential value, and takes no responsibility for, the reality
of today’s Vulcan or the challenges it faces.
“We also can’t help but note that despite Vulcan’s statements
that its stock is trading at a 10-year low, its current unaffected
EBITDA multiple is meaningfully higher than Martin Marietta or
Vulcan’s historical multiples, fully reflecting any potential
higher standalone growth prospects.
“The Martin Marietta proposal offers a reality-based opportunity
to Vulcan shareholders who will receive an upfront premium, 58%
ownership in the combined company, a meaningful dividend and the
synergies and any cyclical recovery that would benefit the combined
company.”
As previously announced, on December 12, 2011, Martin Marietta
commenced an exchange offer in which each outstanding share of
Vulcan will be exchanged for 0.50 Martin Marietta shares. The offer
represents a premium for Vulcan shareholders of 15% to the average
exchange ratio based on the closing share prices for Vulcan and
Martin Marietta during the 10-day period ended December 9, 2011 and
18% to the average exchange ratio based on the closing share prices
for Vulcan and Martin Marietta during the 30-day period ended
December 9, 2011. Martin Marietta also intends to maintain the
dividend for the combined company at Martin Marietta's current rate
of $1.60 per Martin Marietta share annually, or the equivalent of
$0.80 per Vulcan share annually, based on the proposed exchange
ratio. This dividend rate is 20 times Vulcan’s current level.
Cautionary Note Regarding
Forward-Looking Statements
This press release may include "forward-looking statements."
Statements that include words such as "anticipate," "expect,"
"should be," "believe," "will," and other words of similar meaning
in connection with future events or future operating or financial
performance are often used to identify forward-looking statements.
All statements in this press release, other than those relating to
historical information or current conditions, are forward-looking
statements. These forward-looking statements are subject to a
number of risks and uncertainties, many of which are beyond Martin
Marietta's control, which could cause actual results to differ
materially from such statements. Risks and uncertainties relating
to the proposed transaction with Vulcan include, but are not
limited to: Vulcan's willingness to accept Martin Marietta's
proposal and enter into a definitive transaction agreement
reasonably satisfactory to the parties; Martin Marietta's ability
to obtain shareholder, antitrust and other approvals on the
proposed terms and schedule; uncertainty as to the actual premium
that will be realized by Vulcan shareholders in connection with the
proposed transaction; uncertainty of the expected financial
performance of the combined company following completion of the
proposed transaction; Martin Marietta's ability to achieve the
cost-savings and synergies contemplated by the proposed transaction
within the expected time frame; Martin Marietta's ability to
promptly and effectively integrate the businesses of Vulcan and
Martin Marietta; a downgrade of the credit rating of Vulcan's
indebtedness, which could give rise to an obligation to redeem
Vulcan's existing indebtedness; the potential implications of
alternative transaction structures with respect to Vulcan, Martin
Marietta and/or the combined company, including potentially
requiring an offer to repurchase certain of Martin Marietta's
existing debt; the implications of the proposed transaction on
certain of Martin Marietta's and Vulcan's employee benefit plans;
and disruption from the proposed transaction making it more
difficult to maintain relationships with customers, employees or
suppliers. Additional risks and uncertainties include, but are not
limited to: the performance of the United States economy; decline
in aggregates pricing; the inability of the U.S. Congress to pass a
successor federal highway bill; the discontinuance of the federal
gasoline tax or other revenue related to infrastructure
construction; the level and timing of federal and state
transportation funding, including federal stimulus projects; the
ability of states and/or other entities to finance approved
projects either with tax revenues or alternative financing
structures; levels of construction spending in the markets that
Martin Marietta and Vulcan serve; a decline in the commercial
component of the nonresidential construction market, notably office
and retail space; a slowdown in residential construction recovery;
unfavorable weather conditions, particularly Atlantic Ocean
hurricane activity, the late start to spring or the early onset of
winter and the impact of a drought or excessive rainfall in the
markets served by Martin Marietta and Vulcan; the volatility of
fuel costs, particularly diesel fuel, and the impact on the cost of
other consumables, namely steel, explosives, tires and conveyor
belts; continued increases in the cost of other repair and supply
parts; transportation availability, notably barge availability on
the Mississippi River system and the availability of railcars and
locomotive power to move trains to supply Martin Marietta's and
Vulcan's long haul distribution markets; increased transportation
costs, including increases from higher passed-through energy and
other costs to comply with tightening regulations as well as higher
volumes of rail and water shipments; availability and cost of
construction equipment in the United States; weakening in the steel
industry markets served by Martin Marietta's dolomitic lime
products; inflation and its effect on both production and interest
costs; Martin Marietta's ability to successfully integrate
acquisitions and business combinations quickly and in a
cost-effective manner and achieve anticipated profitability to
maintain compliance with Martin Marietta's leverage ratio debt
covenants; changes in tax laws, the interpretation of such laws
and/or administrative practices that would increase Martin
Marietta's and/or Vulcan's tax rate; violation of Martin Marietta's
debt covenant if price and/or volumes return to previous levels of
instability; a potential downgrade in the rating of Martin
Marietta's or Vulcan's indebtedness; downward pressure on Martin
Marietta's or Vulcan's common stock price and its impact on
goodwill impairment evaluations; the highly competitive nature of
the construction materials industry; the impact of future
regulatory or legislative actions; the outcome of pending legal
proceedings; healthcare costs; the amount of long-term debt and
interest expense incurred; changes in interest rates; volatility in
pension plan asset values which may require cash contributions to
pension plans; the impact of environmental clean-up costs and
liabilities relating to previously divested businesses; the ability
to secure and permit aggregates reserves in strategically located
areas; exposure to residential construction markets; and the impact
on the combined company (after giving effect to the proposed
transaction with Vulcan) of any of the foregoing risks, as well as
other risk factors listed from time to time in Martin Marietta's
and Vulcan's filings with the SEC.
The foregoing review of important factors should not be
construed as exhaustive and should be read in conjunction with the
other cautionary statements that are included elsewhere, including
the Risk Factors section of the Registration Statement and our most
recent reports on Form 10-K and Form 10-Q, and any other documents
of Martin Marietta and Vulcan filed with the SEC. Any
forward-looking statements made in this press release are qualified
in their entirety by these cautionary statements, and there can be
no assurance that the actual results or developments anticipated by
us will be realized or, even if substantially realized, that they
will have the expected consequences to, or effects on, us or our
business or operations. Except to the extent required by applicable
law, we undertake no obligation to update publicly or revise any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Important Additional
Information
This press release relates to the Exchange Offer by Martin
Marietta to exchange each issued and outstanding share of common
stock of Vulcan for 0.50 shares of Martin Marietta common stock.
This press release is for informational purposes only and does not
constitute an offer to exchange, or a solicitation of an offer to
exchange, shares of Vulcan common stock, nor is it a substitute for
the Tender Offer Statement on Schedule TO or the preliminary
prospectus/offer to exchange included in the Registration Statement
on Form S-4 (the "Registration Statement") (including the letter of
transmittal and related documents and as amended and supplemented
from time to time, the "Exchange Offer Documents") filed by Martin
Marietta on December 12, 2011 with the SEC. The Registration
Statement has not yet become effective. The Exchange Offer will be
made only through the Exchange Offer Documents. INVESTORS AND
SECURITY HOLDERS ARE URGED TO READ THE EXCHANGE OFFER DOCUMENTS AND
ALL OTHER RELEVANT DOCUMENTS THAT MARTIN MARIETTA HAS FILED OR MAY
FILE WITH THE SEC IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION.
Martin Marietta may file a proxy statement on Schedule 14A and
other relevant documents with the SEC in connection with the
solicitation of proxies (the "Vulcan Meeting Proxy Statement") for
the 2012 annual meeting of Vulcan shareholders (the "Vulcan
Meeting"). Martin Marietta may also file a proxy statement on
Schedule 14A and other relevant documents with the SEC in
connection with its solicitation of proxies for a meeting of Martin
Marietta shareholders (the "Martin Marietta Meeting") to approve,
among other things, the issuance of shares of Martin Marietta
common stock pursuant to the Exchange Offer (the "Martin Marietta
Meeting Proxy Statement"). INVESTORS AND SECURITY HOLDERS ARE URGED
TO READ THE VULCAN MEETING PROXY STATEMENT AND THE MARTIN MARIETTA
MEETING PROXY STATEMENT AND OTHER RELEVANT MATERIALS IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT
INFORMATION.
All documents referred to above, if filed, will be available
free of charge at the SEC's website (www.sec.gov) or by directing a
request to Morrow & Co., LLC at (877) 757-5404 (banks and
brokers may call (800) 662-5200).
Martin Marietta, its directors and executive officers and the
individuals referenced in the Registration Statement to be
nominated by Martin Marietta for election to Vulcan's Board of
Directors are participants in any solicitation of proxies from
Vulcan shareholders for the Vulcan Meeting or any adjournment or
postponement thereof. Martin Marietta, its directors and executive
officers are participants in any solicitation of proxies from
Martin Marietta shareholders for the Martin Marietta Meeting or any
adjournment or postponement thereof. Information about the
participants, including a description of their direct and indirect
interests, by security holdings or otherwise, is available in the
Registration Statement or the proxy statement for Martin Marietta's
2011 annual meeting of shareholders, filed with the SEC on April 8,
2011, or will be available in the Vulcan Meeting Proxy Statement,
the Martin Marietta Meeting Proxy Statement or other relevant
solicitation materials that Martin Marietta files with the SEC in
connection with the foregoing matters, as applicable.
About Martin Marietta
Martin Marietta Materials, Inc. is the nation's second largest
producer of construction aggregates and a producer of
magnesia-based chemicals and dolomitic lime. For more information
about Martin Marietta Materials, Inc., refer to the Corporation's
website at www.martinmarietta.com.
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