When construction materials producer Florida Rock Industries announced its sale last year to Vulcan Materials, the housing industry was starting its downward slide.
But for the execs at both companies, the sting of the slowdown has at least been accompanied by a silver lining, as terms of the merger were finalized on Nov. 16, 2007. When all was said and done, Vulcan, the largest aggregate producer in the United States, picked up the IW 50 Best Manufacturer (which will operate as a subsidiary) for approximately $4.2 billion.
A potential roadblock might however come from the Department of Justice, which has raised concerns in regard to maintaining competition in markets where Vulcan Materials new operations will now participate.
The DOJ filed a civil antitrust lawsuit to block the whole transaction on Nov. 13, but also proposed a consent decree that required a divestiture of several quarries and a distribution yard in various parts of Georgia, Virginia and Tennessee. If approved by the court, the decree would resolve the lawsuit and the department's concerns.
"Without the divestitures obtained by the department, purchasers of coarse aggregate [in those markets] likely would have faced higher prices as a result of this transaction," said Thomas Barnett, assistant attorney general in charge of the DOJ's Antitrust Division, in a statement. "The divestitures will ensure that these customers will continue to receive the benefits of competition."
In spite any legal difficulties, Vulcan's chairman and CEO Don James told the Birmingham News on Feb. 18 that "integration of this acquisition is proceeding smoothly and according to our plans."
The acquisition further diversifies the geographic scope of Vulcan's operations, providing the company with an enhanced presence in Florida markets and in other high-growth Southeast and Mid-Atlantic states -- not to mention bringing Vulcan Materials more than 2 billion tons of aggregates reserves in markets where reserves are increasingly scarce.
At A Glance
Florida Rock Industries Inc.
Primary Industry: Stone, Clay, Glass and Concrete Products
Number of Employees: 2,950
2006 In Review
Revenue: $1.08 billion
Profit Margin: 15.46%
Sales Turnover: 1.11
Inventory Turnover: 19.07
Revenue Growth: 18.58%
Return On Assets: 20.08%
Return On Equity: 28.27%
"We can now begin pursuing the synergies from our combination and opportunities from our broadened regional footprint and expanded presence in some of the most attractive construction materials markets in the U.S.," James said in a statement. "The addition of Florida Rock will enhance our strategic position and long-term growth opportunities."
Even with all the shrewd deal-making throughout the last year, the housing fallout has simply been impossible to avoid. While shares in Florida Rock are no longer traded, that fact was evident when Vulcan Materials released its fourth-quarter 2007 earnings on Feb. 14, posting a 26% drop in profits attributed to the "drop in residential construction activity."
Further details about the acquisition can be found at www.vulcanfloridarock.com.
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