Vulcan sues Martin Marietta over takeover bid

AP News
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Posted: Dec 22, 2011 10:39 AM
Vulcan sues Martin Marietta over takeover bid

Vulcan Materials has sued Martin Marietta in federal court, accusing the smaller gravel, sand and stone supplier of launching an illegal takeover attempt of Vulcan.

Vulcan, based in Birmingham, Ala., also on Wednesday strongly recommended that its shareholders not tender their stock to Martin Marietta, which announced a hostile bid for the company earlier this month.

Martin Marietta, based in Raleigh, N.C., has said it plans to take a stock offer directly to Vulcan shareholders after Vulcan cut off negotiations that started more than a year and a half ago.

Under the offer, valued at about $4.74 billion, Vulcan Materials Co. shareholders would get half a share of Martin Marietta Materials Inc. stock for each of their Vulcan shares. That offer valued Vulcan at $36.69 per share, a 9.4 percent premium, based on the stock's closing price Dec. 9, the last trading day before Martin Marietta's announcement.

Martin Marietta also said when it announced its bid that it had filed lawsuits in both Delaware Chancery Court and New Jersey state court to ensure Vulcan shareholders get a chance to consider its offer.

Both companies make construction aggregates like crushed stone, sand and gravel. They also produce asphalt mix, concrete and cement. A combination of the two companies would create the largest U.S. producer of construction aggregates, according to Vulcan.

Vulcan said Martin Marietta launched its bid after receiving "highly sensitive" and confidential information from Vulcan under two separate agreements.

"Martin Marietta's misuse and improper disclosure of critical confidential information in connection with its offer is a material breach of these agreements and a violation of federal securities law," Vulcan said in a statement, adding that it has started litigation against Martin Marietta in U.S. District Court for the Northern District of Alabama.

Martin Marietta representatives did not immediately return calls seeking comment.

Vulcan also said it filed a counterclaim in Delaware to enjoin the offer and enforce its rights under federal securities law.

Vulcan called Martin Marietta's offer opportunistic and said it seeks to exploit a historic downturn in U.S. construction spending. It also said the proposed deal undervalues Vulcan and its future prospects, and divestitures that likely would be required by federal regulators would hurt the financial results of the combined company.

Vulcan shares fell 43 cents to $38.45 in Thursday morning trading, while Martin Marietta's stock fell 29 cents to $76.11. Broader trading indexes were up slightly.