CalMat Swaps Its Cement Unit for Stock
CalMat, one of Los Angeles’ oldest and largest companies, Monday swapped its California Portland Cement subsidiary for CalMat stock held by the largest cement maker in Japan in a deal valued at about $310 million.
Onoda Cement Co. bought the 5.8 million shares and received the option to buy California Portland Cement two years ago as part of a deal that thwarted a hostile takeover of CalMat by New Zealand corporate raider Ronald A. Brierley. Industry officials had expected Onoda to exercise the option, making it the state’s largest cement producer and further increasing foreign control of the U.S. cement industry.
As part of the deal, CalMat will receive $68 million in cash, and Onoda’s cement subsidiary will assume $18 million in debt. CalMat said it will use the cash to reduce debt and might buy back some of its common stock in the future. The 5.8 million shares obtained from Onoda will be retired.
The deal will leave CalMat as one of the nation’s largest producers of sand and gravel--its core businesses--and of asphalt and ready-mixed concrete, with a total of about 100 plants. The cement subsidiary accounted for about 15% of CalMat’s $29 million in first-half profit this year but had the company’s narrowest profit margins.
“Our plans are to concentrate on aggregates (rock and sand) and to grow,” said Ron Hadfield, CalMat’s chief financial officer. “We also have 34,000 acres of land and we will continue to be in the real estate business in terms of land development.”
The swap will give Onoda California Portland Cement about 20 plants and facilities in California and Arizona to make and distribute ready-mix concrete and cement, which is used to make concrete.
Ronald E. Evans, 52, who has headed California Portland Cement as an executive vice president under CalMat, will be retained by the new owners as president of the Glendora-based company. A company official said no major changes in operations or staff are anticipated as a result of the Onoda takeover.
In 1988, Onoda stepped in as a corporate white knight by buying the 5.8 million CalMat shares at $41.75 each from Brierley.
A construction industry slump has hurt the profitability of the U.S. cement industry.
