CalMat Will Sell S.D. Units to Help Fend Off Bid
CalMat, a big construction material company, said Tuesday that it plans to shed its real estate and cement business in a dramatic move designed to ward off a hostile takeover bid from New Zealand investor Ronald A. Brierley.
The properties to be sold include 350 acres of real estate in San Diego County including the Rio Vista project in Mission Valley, a spokesman said. In two separate joint ventures, CalMat is now building a 200,000-square-foot office building and a 300-room Marriott Hotel in the Rio Vista project.
CalMat’s undeveloped land in Mission Valley has received planning approvals allowing for a total of 1.1 million square feet of additional office space and 1,400 residential units.
The company said it expects to receive $800 million from the sale of its cement and real estate, located mostly in Southern California.
CalMat will distribute the after-tax proceeds from the sales to shareholders. CalMat declined to say what shareholders can expect to receive.
Les Werkstell, an analyst with First Manhattan in New York, said it was difficult to compare CalMat’s restructuring to Brierley’s $40-a-share offer for the company. “We don’t know how the sale proceeds will be taxed,” he said.
In composite trading on the New York Stock Exchange on Tuesday, CalMat’s shares closed at $44 a share, up 87.5 cents.
Brierley owns 19% of CalMat’s shares through his Hong Kong investment firm, Industrial Equity (Pacific), a firm which also has an office in La Jolla. His offer for CalMat was rejected last week by the company’s board, which said it was considering other options.
In New Zealand, a spokesman for Brierley didn’t respond to a request for comment.
The sales of its cement and real estate businesses would leave Los Angeles-based CalMat with profitable operations in aggregates, ready mixed concrete and asphalt. Those lines reported operating income of $98.5 million last year on revenue of $476 million. The cement business had operating profit of $28.3 million last year, and the real estate business posted $22.7 million in profit for 1987.
A. Frederick Gerstell, president and chief executive of CalMat, said in a statement that the corporate reorganization allows the company to concentrate on businesses “where the prospects for long-term growth and profit are greatest.”
