Case 1 Martin Marietta Vulcan Merger

1423 words 6 pages
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
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As seen in table 2 below Vulcan had a projected increase of 15.35% while Martin Marietta only showed a marginal increase in equity. Vulcan Materials
Martin Marietta
Common Shares
129245000.00
45726000
Price 12/9/2011
$33.55
$73.37
Market Value 12/9/2011
$4,336,169,750.00
$3,354,916,620.00
Price 12/12/2011
$38.70
$74.61
Market value (12/12/2011)
$5,001,781,500.00
$3,411,616,860.00
Equity Change
15.35%
1.69%
Firm return
$665,611,750.00
$56,700,240.00
Table 3: Equity Change
The total market return to Vulcan was higher than what management had predicted, but was lower than Martin Marietta’s estimate. Judging by the single day increase in price, the market sent a strong signal indicating positive reaction towards the merger, but based on the change in equity, Martin Marietta should reconsider their offer.

Moving forward
As a potential advisor to Martin Marietta, we would recommend Martin Marietta to increase the deal. The article “Martin Marietta Seen Bumping Vulcan Bid: Real M & A” states, “To win over Vulcan’s board and shareholders, Thompson Research Group said Martin Marietta may need to offer 0.7 share for each Vulcan share, a 40% boost in the takeover price from the original 0.5 to 1 ratio.” Industry insiders felt the original deal

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