Raleigh-based Martin Marietta reportedly in talks to buy Texas Industries

Bloomberg NewsJanuary 24, 2014 

Raleigh-based Martin Marietta Materials, the United States’ second-largest producer of sand, gravel and crushed rock used in construction, is in advanced talks to acquire building-materials company Texas Industries, people with knowledge of the matter said.

An agreement could be announced as early as next week, said the people, who asked not to be named because the information is private. Dallas-based Texas Industries, which has a market value of almost $2 billion, is working with Citigroup to find a buyer, people said last month.

Talks restarted late this week after earlier hitting a snag, two people said. There’s still a chance no agreement will be reached, the people said. The deal could be an all-stock transaction, one person said.

Texas Industries’ strength in California and its home state would give Martin Marietta an entry into the cement market amid a U.S. construction rebound. The crushed stone, gravel and sand that Martin Marietta already produces, known as aggregates, are mixed with cement to produce concrete.

In 2013, builders began work on 923,400 homes, an increase of 18 percent from the prior year and the most since 2007.

Lesley Vines, Texas Industries’ corporate controller and treasurer, declined to comment in an email, citing company policy not to comment on rumors. Officials at Martin Marietta didn’t immediately reply to messages seeking comment.

Martin Marietta, which shipped 128 million tons of materials in 2012, began expanding outside of its core business in 2011, including an asset swap to gain concrete and asphalt operations near Denver.

Chief Executive Officer Ward Nye said in August that the increase in these “vertically integrated businesses” was a way to tap growing markets.

Building-materials companies struggled through a housing and commercial-construction slump that shrank U.S. cement demand by 44 percent in the five years ended in 2010, according to data compiled by Bloomberg. Consumption in 2010 of 71 million tons was the lowest since 1980, and that figure rose only to 79 million tons in 2012, the data show.

Annual production capacity at Texas Industries is 6.8 million tons. The company, which operates two cement plants in Texas and one in California, has posted losses from continuing operations in four of the past five years.

Martin Marietta attempted a hostile bid for Birmingham, Ala.-based Vulcan Materials in December 2011. That effort failed. Martin Marietta was forced to halt the effort after a Delaware judge ruled that the company violated a 2010 confidentiality agreement with Vulcan in making its bid.

Martin Marietta shares closed Friday at $104.32, down $4.85. The stock is up 5 percent over the past year.

Staff writer David Bracken contributed.

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