Vulcan Materials to buy Florida Rock
Vulcan Materials Co., the biggest U.S. producer of highway construction materials, said Monday that it would acquire Florida Rock Industries Inc. for $4.6 billion in cash and stock to expand in the U.S. Southeast and the mid-Atlantic region.
Florida Rock stockholders would receive either 0.63 shares of the new company or $67 in cash for each of their shares. The offer, which is prorated so that 70% of Florida Rock shares would be converted into cash and 30% into stock, values the Jacksonville, Fla.-based company at $68.03 a share, 45% above its closing price Friday, Vulcan said.
The purchase of Florida Rock would increase Vulcan’s reserve of aggregate, or the crushed stone and sand used to make concrete, by about 20% to 13.9 billion tons, including about 2.5 billion tons in Florida, where sources are scarce, Vulcan Chief Executive Don James said.
“Combining with Florida Rock further diversifies and broadens our reach and regional exposure, providing us with a significant presence in Florida, one of the fastest-growing markets for aggregates in the U.S.,” James said.
The acquisition, which should close in the middle of this year, is forecast to add to profit starting next year, Birmingham, Ala.-based Vulcan said. It would produce cost savings of $50 million a year, the company said.
Shares of Vulcan Materials fell 50 cents to $111.81 on Friday. They have risen 44% in the last year. Shares of Florida Rock fell 40 cents to $46.96 on Friday. They have fallen 17% in the last 12 months.
The Baker family, which founded Florida Rock and is the company’s largest shareholder, has agreed to support the transaction, Vulcan said. Florida Rock CEO John Baker would become a director of the new company. Tom Baker, Florida Rock vice president of cement and aggregates, would become president of the Florida Rock unit.