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Martin Marietta acquires Texas Industries

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World Cement,

Further to yesterday’s report of a rumoured buyout of TXI by Martin Marietta Materials, Inc., we can now confirm that the transaction has been approved by both parties. Martin Marietta will acquire all of the outstanding shares of Texas Industries common stock in a tax-free, stock-for-stock transaction. TXI shareholders will receive 0.700 Martin Marietta shares for each share of TXI common stock they own at close of business on 27 January. According to a statement on the TXI website, the combined company will have an enterprise value of approximately US$8.5 billion based on the closing market prices for the shares of both companies on 27 January and taking into account the debt levels as of their most recently completed quarters.

Extended geographic and product offering

The combined company will have greater geographic and product diversity, offering aggregates, heavy building materials and cement. Together the firms have a network of more than 400 quarries, mines, distribution yards and plants spanning 36 states, Canada, the Bahamas and the Caribbean Islands.

The transaction reflects an enterprise value of approximately US$2.7 billion, including the assumption of US$0.7 billion of Texas Industries' debt. Upon completion of the acquisition, Martin Marietta shareholders are expected to own approximately 69 percent and Texas Industries shareholders are expected to own approximately 31% of the combined company.

Vertical integration

Ward Nye, Martin Marietta's President and Chief Executive Officer said, “As a result of this combination, we will be poised to capitalise on the strength of our combined aggregates platform as well as the significant upside potential in the infrastructure, residential and nonresidential construction segments. We are confident that combining our companies will accelerate our ability to increase sales and cash flow and improve margins. We are excited about the opportunities ahead and look forward to quickly realising the benefits of this transaction."

Mel Brekhus, Texas Industries' President and Chief Executive Officer, said, "Combining with Martin Marietta represents a unique opportunity to create a more competitive company with a solid, diversified portfolio of assets, enhanced credit profile and a strong balance sheet. We are confident that we have found the right partner. This combination will advance our growth objectives, deliver significant value to all of our stakeholders, and allow shareholders to participate in the combined company's potential growth and value creation. In addition, we are pleased that, through this combination, our shareholders will enjoy a strong dividend distribution. This transaction will create a larger, stronger entity with enhanced career and professional development opportunities for employees. I look forward to working closely with Ward and the proven management teams of both companies to complete the transaction quickly and to ensure a smooth transition."

Top talent

The combined company will operate under the name Martin Marietta Materials, Inc. and will be headquartered in Raleigh, North Carolina, though maintaining a significant presence in Dallas.

Ward Nye and the rest of the Martin Marietta executive team will lead the combined company. Top talent across the combined organisation will be retained based on a "best athlete" approach. An individual jointly selected by Martin Marietta and Texas Industries will be appointed to the Martin Marietta Board of Directors.

The companies anticipate closing the transaction in the second quarter of 2014. The transaction is subject to regulatory and shareholder approvals.

The full details of the transaction can be seen here.

Adapted from press release by

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