Martin Marietta Materials has bought Bluegrass Materials Company for $1.625 billion in cash.
Bluegrass is the largest privately-held, pure-play aggregates company in the United States, with 125 years of high-quality reserves.
Bluegrass operates 23 active sites in Georgia, South Carolina, Maryland, Kentucky and Tennessee, generating consolidated EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) margins that are consistent with those in Martin Marietta's Southeast and Mid-Atlantic Divisions that the company views as best-in-class.
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Bluegrass’s operations are located in Kentucky, South Carolina, Tennessee, Georgia and Maryland[/caption]
Bluegrass' Georgia and South Carolina operations complement Martin Marietta's existing southeastern footprint while expanding the range of products that can be provided to both new and existing customers.
As the leading aggregates producer in Maryland, Bluegrass will provide Martin Marietta with a strategic new growth platform within the southern portion of the Northeast Megaregion, serving the Baltimore, Frederick, Hagerstown and Maryland Eastern Shore metropolitan areas as well as Delaware. With aggregates shipments currently 20% to 30% below peak levels, all of these markets are expected to benefit from the accelerating economic recovery in the eastern United States. Additionally, Bluegrass has leading positions in Bowling Green and eastern Kentucky and an attractive position in Tennessee.
Ward Nye, chief executive, Martin Marietta, said: "The acquisition of Bluegrass directly aligns with our long-term strategic growth plan. Bluegrass' strategic assets, combined with the depth and strength of its personnel, are a natural fit with Martin Marietta. Through its significant operational investments, Bluegrass has achieved leading positions in some of the nation's highest growth markets while maintaining an impressive cost profile."
"The culture and values of both companies are closely aligned, and we look forward to welcoming Bluegrass to the Martin Marietta team. Working together, we will continue to achieve growth, operational excellence and cost discipline to deliver significant value for shareholders," Nye said.
Ted Baker II, chief excecutive, Bluegrass, said: "We ran a thorough, competitive process and we are pleased to partner with Martin Marietta, an industry leader with strong values and a distinguished safety record. My family and I thank our company's dedicated employees, along with our current partners, Lindsay Goldberg and Bluewater Worldwide, for their investment and meaningful support over the years."
Martin Marietta expects annual run-rate cost savings of approximately $15 million. Including synergies, the purchase price represents a multiple that is in-line with recently completed aggregates transactions. Martin Marietta expects the transaction to be accretive to earnings per share and cash flow in the first full year.
The transaction is expected to close in the fourth quarter of 2017, subject to regulatory approvals and other customary closing conditions.
