Vulcan rejects Martin Marietta's US$ 4.8 billion bid

By Helen Wright28 December 2011

The board of US construction materials producer Vulcan Materials has unanimously rejected a US$ 4.8 billion hostile takeover approach from rival Martin Marietta Materials (MMM), branding it "illegal and opportunistic".

The company urged its shareholders not to tender any shares to MMM, which approached them directly with the stock-for-stock offer that would see each Vulcan share exchanged for 0.5 MMM shares.

MMM claims the combination would create a "global leader in construction aggregates with a footprint reaching across North America". It said the merged companies would boast a combined market capitalisation of US$ 7.7 billion, and mineral reserves totalling 25 billion tonnes.

But Vulcan said the hostile offer was risky, opportunistic and undervalued the company, pointing out that it could also involve forced divestments under competition law.

Improper disclosure

Vulcan also claimed that the approach was illegal and said it had had filed lawsuits against MMM in the US District Court for the Northern District of Alabama, as well as a counterclaim in Delaware, in an effort to forestall the offer.

"Prior to launching its unsolicited offer, Martin Marietta obtained from Vulcan highly sensitive, material, non-public and confidential information," the company said, claiming that MMM had misused and improperly disclosed critical confidential information to make the hostile offer, in violation of federal securities laws.

MMM and Vulcan have held private discussions over a potential tie-up in the past.

"MMM and Vulcan and have privately discussed this opportunity at length and over time," MMM said, adding, "However, Vulcan has ceased participation in these private discussions toward a negotiated transaction, which commenced over a year and a half ago. We therefore decided to take our proposal directly to Vulcan's shareholders."

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