Martin Marietta Materials, Inc. (MLM - Snapshot Report) recently announced that it has completed the asset divestitures as demanded by the U.S. Department of Justice (DOJ) for the approval of the Texas Industries deal.
The leading supplier of aggregates and heavy building materials completed the Texas Industries acquisition in early July for $2.7 billion, including debt. The acquisition was first announced in January.
The DOJ approved the deal on condition that Martin Marietta would divest its North Troy aggregate quarry in Mill Creek, OK and its two rail yards sites in Dallas and Frisco, TX to resolve competition issues with respect to the acquisition. Martin Marietta has sold the assets to another aggregates producer Vulcan Material Company (VMC - Analyst Report) for cash and real property.
The Texas Industries acquisition has strengthened Martin Marietta’s position in the aggregates market while increasing presence of its concrete business in high-end markets like Texas. It also exposed Martin Marietta to the growing cement markets in Texas and California.
Martin Marietta expects the acquisition to contribute to earnings per share in 2014 and increase cash flow in the first fiscal year following the integration. The acquisition is expected to generate $70 million of annual pre-tax synergies by fiscal 2017. Also, in connection with the acquisition, Martin Marietta issued $700 million of senior year notes.
Other Stocks to Consider
Martin Marietta Materials carries a Zacks Rank #3 (Hold). Other stocks in the building sector worth considering include PGT, Inc. (PGTI - Snapshot Report) and Winnebago Industries, Inc. (WGO - Analyst Report). Both the companies have a Zacks Rank #2 (Buy).