By Lisa Kerner
Charlotte, N.C., Feb. 20 - Vulcan Materials Co. signed a definitive agreement to acquire Florida Rock Industries Inc. in a cash and stock transaction valued at approximately $4.6 billion, or about $68.03 per share.
The acquisition, unanimously approved by both companies' boards of directors, is expected to close in mid-2007, according to a news release.
Vulcan Materials shareholders will receive one share of common stock in a new holding company for each Vulcan Materials share, and Florida Rock shareholders can elect to receive either 0.63 shares of the new holding company or $67.00 in cash for each Florida Rock share.
A total of 70% of Florida Rock shares will be converted into cash and 30% of Florida Rock shares will be converted into stock. Florida Rock shareholders will own roughly 12% of the combined company.
Goldman, Sachs & Co. has committed to bridge financing for the transaction, according to the release.
Vulcan Materials said it will have about $3.7 billion in debt following the close of the transaction, but expects significant operating cash flows will enable the company to reduce its debt-to-capital ratio to between 35% and 40% within three years.
Florida Rock founders the Baker family entered into a voting agreement to support the transaction. Florida Rock president and chief executive officer John Baker will join Vulcan Materials' board of directors and Tom Baker, a Florida Rock vice president, will become president of Vulcan Materials' new Florida Rock Division in Jacksonville Fla.
"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 United States - and bringing us approximately 2.5 billion tons of reserves in markets where reserves are increasingly scarce," Vulcan Materials chairman and chief executive officer Don James said in the release.
"The combined company will have enhanced earnings growth and a strong cash flow profile to reduce debt while maintaining Vulcan Materials' historical dividend practices and significantly increasing the dividend to Florida Rock shareholders."
Both Vulcan Materials, based in Birmingham, Ala., and Florida Rock, located in Jacksonville, Fla., produce construction aggregates and other construction materials.
| Acquirer: | Vulcan Materials Co.
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| Target: | Florida Rock Industries Inc.
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| Transaction value: | $4.6 billion
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| Payment per share: | $68.03 per share
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| Announcement date: | Feb. 20
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| Expected closing: | Mid-2007
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| Stock price for acquirer: | NYSE: VMC; $111.81 on Feb. 16
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| Stock price for target: | NYSE: FRK; $46.96 on Feb. 16
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