Case 1 Martin Marietta Vulcan Merger
Drexel LeBow College of Business
FIN 640 – Mergers and Acquisitions
Case Study: Martin Marietta – Vulcan Merger
Presented by:
Dharmesh Bharathan
Andrew Hall
Luis Hernandez
Aziz Khan
Teng Zhang
Executive Summary
This case study examines the proposed merger of Vulcan Materials and Martin Marietta both providers of construction aggregates. A stock-for-stock merger had the potential of making the company a global leader in construction materials, but was marred by disagreements over executive succession, location of new headquarters and the stock exchange proposed by Martin Marietta. Furthermore, as negotiations deteriorated Martin Marietta attempted a hostile takeover of Vulcan and also tried to get its directors appointed to Vulcan’s board. However, a court ruling determined that Martin Marietta was in breach of its NDA by using numbers determined from its merger valuation to determine the latest bid. In addition to this the court placed an injunction that prevented Martin Marietta from participating in the upcoming board elections. While the merger was unsuccessful, we use this case to study the market reaction to the merger announcement, valuation of the offer and the associated abnormal returns. We conclude with our interpretation of the proposed merger.
Martin Marietta –Vulcan Merger
The Great Recession was the initial impetus for Martin Marietta to seek out an acquisition of Vulcan. The leadership of Martin Marietta first approached Vulcan in halfway through 2009 after struggling to grow organically due to the slow economic recovery. Additionally the aggregates industry depended heavily on government infrastructure projects with very uncertain scopes and timing. The leadership of Martin Marietta believed that a merger with Vulcan would create a strong global leader in the aggregate industry better able to withstand a sluggish economy and uncertain government spending. They felt that combining the assets, leadership, and knowledge would
FIN 640 – Mergers and Acquisitions
Case Study: Martin Marietta – Vulcan Merger
Presented by:
Dharmesh Bharathan
Andrew Hall
Luis Hernandez
Aziz Khan
Teng Zhang
Executive Summary
This case study examines the proposed merger of Vulcan Materials and Martin Marietta both providers of construction aggregates. A stock-for-stock merger had the potential of making the company a global leader in construction materials, but was marred by disagreements over executive succession, location of new headquarters and the stock exchange proposed by Martin Marietta. Furthermore, as negotiations deteriorated Martin Marietta attempted a hostile takeover of Vulcan and also tried to get its directors appointed to Vulcan’s board. However, a court ruling determined that Martin Marietta was in breach of its NDA by using numbers determined from its merger valuation to determine the latest bid. In addition to this the court placed an injunction that prevented Martin Marietta from participating in the upcoming board elections. While the merger was unsuccessful, we use this case to study the market reaction to the merger announcement, valuation of the offer and the associated abnormal returns. We conclude with our interpretation of the proposed merger.
Martin Marietta –Vulcan Merger
The Great Recession was the initial impetus for Martin Marietta to seek out an acquisition of Vulcan. The leadership of Martin Marietta first approached Vulcan in halfway through 2009 after struggling to grow organically due to the slow economic recovery. Additionally the aggregates industry depended heavily on government infrastructure projects with very uncertain scopes and timing. The leadership of Martin Marietta believed that a merger with Vulcan would create a strong global leader in the aggregate industry better able to withstand a sluggish economy and uncertain government spending. They felt that combining the assets, leadership, and knowledge would