Vulcan Materials Company (VMC - Free Report) recently announced the sale of its non performing cement and concrete businesses in Florida to Cementos Argos for $720 million. The transaction is expected to close in the first quarter of 2014. Cementos Argos is one of the largest cement and concrete manufacturers and suppliers in the United States
Vulcan Materials is engaged in the production, distribution and sale of construction aggregates and other construction materials and related services in the U.S. and Mexico. Vulcan is the largest producer of construction aggregates in the U.S. Aggregates like crushed stone, sand and gravel are used in all types of construction projects, whether public or private.
Located in Florida and south Georgia, these assets include Vulcan's Newberry, Florida cement plant, Tampa and Port Manatee cement terminals and grinding facilities, 69 ready-mixed concrete sites and 13 concrete block and building material sites. Post the divesture of the businesses in Florida, Vulcan will continue its aggregate operations in the state and will retain its cement segment's ground calcium operations. Vulcan will supply aggregates to these divested concrete facilities at market prices for the next 20 years.
The recent divestures of non-core assets will strengthen the company’s financial position and help the company reduce debt and focus its resources on its aggregates segments. Once the divestiture is completed, it will generate a pre-tax gain of $210 million.
Aggregates must ideally be produced near the area of use to save on transport costs. The company’s other production facilities and aggregates reserves are situated at close proximity to large metropolitan cities, thus giving it a competitive advantage to invest in high-return projects.
Vulcan Materials carries a Zacks Rank #3 (Hold). Other better-ranked industrial goods companies are Beazer Homes USA Inc. (BZH - Free Report) , MDC Holdings Inc. (MDC - Free Report) and Toll Brothers Inc. (TOL - Free Report) . All the three companies carry a Zacks Rank #2 (Buy).