Vulcan Materials Company (VMC) has acquired a quarry in Oklahoma with rail connectivity to Texas and a couple of distribution yards in Dallas from Martin Marietta Materials, Inc. (MLM). The deal is expected to strengthen Vulcan’s position in one of its major aggregate markets, Texas.
Vulcan Materials is the largest producer of construction aggregates in the U.S. Aggregates like crushed stone, sand and gravel are used in all kinds of construction projects, whether public or private.
Vulcan has been reporting over 15% increase in aggregate volume in the Texas market for the past few quarters. The acquisition of the resources in Texas will further strengthen the company’s business in this lucrative market.
Aggregates volumes and pricing rose year over year in the recently reported second quarter 2014, resulting in high double digit increase in segment revenue. Aggregate segment benefited from higher demand for Vulcan products as the construction activity gained traction.
On the other hand, Martin Marietta had to sell these assets in accordance to a settlement with the U.S. Department of Justice (DOJ) in relation to its acquisition of Texas Industries. Martin Marietta completed the Texas Industries acquisition in early July for $2.7 billion, including debt. The DOJ approved the deal on condition that Martin Marietta would divest its North Troy aggregate quarry in Mill Creek, OK and its two rail yards sites in Dallas and Frisco, TX to resolve competition issues with respect to the acquisition.
Vulcan Materials carries a Zacks Rank #3 (Hold).
Investors interested in the building construction/building products sector can consider better-ranked stocks like PGT, Inc. (PGTI) and Boise Cascade Co. (BCC). Both the companies hold a Zacks Rank #2 (Buy).
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