Martin Marietta, Texas Industries Merger Gets Shareholder Nod - Analyst Blog

Martin Marietta Materials, Inc. MLM and Texas Industries, Inc. TXI recently received approval for their proposed merger from majority of their shareholders. About 98% of Martin Marietta and 99% of Texas Industries shareholders have voted for the acquisition deal announced on Jan 28.

Per the definitive merger deal, Martin Marietta will acquire all the outstanding shares of Texas Industries, a manufacturer of heavy construction materials in Southwestern U.S. Accordingly, Texas Industries will become a wholly-owned subsidiary of Martin Marietta

According to the agreement, Texas shareholders will receive 0.7 Martin Marietta shares against every Texas share they own.

The companies have now got all required regulatory approvals for closing the acquisition. However, in order to close the deal, Martin Marietta must divest its North Troy aggregate quarry in Mill Creek, OK and its two rail yards sites in Dallas and Frisco, TX, as per the requirement of U.S. Department of Justice (DOJ).

The waiting period related to the merger under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 has been terminated. With the approval from shareholders, the transaction is expected to be closed promptly.

Headquartered in Raleigh, NC, the combined company will have an enterprise value of $8.5 billion and will be headed by Ward Nye and the Martin Marietta executive team.

With the completion of the acquisition, Martin Marietta is expected to become the largest producer of construction aggregates and heavy building materials, which includes crushed stone, sand and gravel. Texas Industries will strengthen Martin Marietta's aggregate reserves and access to high end markets such as Texas.

The merger will also result in vertical integration across aggregates and targeted cement, which will increase productivity and scale of production. The combined company will benefit from an increase in geographic diversity and combined access to a larger market.

Martin Marietta Materials carries a Zacks Rank #4 (Sell).

Investors interested in the building construction/building products sector can consider stocks like Gafisa S.A. GFA and TRI Pointe Homes, Inc. TPH. Both the companies hold a Zacks Rank #2 (Buy).