Vulcan to Sell Florida Cement, Concrete Assets

January 23, 2014

Vulcan Materials Co. will sell its cement and concrete businesses in Florida to Cementos Argos for gross cash proceeds of $720 million.

The company will retain all of its aggregates operations in Florida. As part of the transaction, Vulcan has entered into a supply agreement to continue to provide aggregates to divested concrete facilities at market prices for a 20-year period. The transaction is expected to close in the first quarter of 2014.

Concurrent with this announcement, the company is initiating a tender offer to purchase $500 million of outstanding debt. In addition, the company exercised an option in December to purchase land containing 136 million tons of aggregates reserves in Southern California for $117 million. The company previously operated this quarry under a lease that was scheduled to expire in 2017. This land purchase increases pretax earnings by eliminating a $7 million per year lease payment and, via a deferred like-kind exchange, allows the company to defer approximately $37 million of cash taxes referable to the sale of land that is part of the cement and concrete assets transaction.

The completion of the asset sale to Cementos Argos and related restructuring and other transaction-related expenses will result in a pretax gain of approximately $210 million, or $1.00 per diluted share. The $500 million reduction in long-term debt via the tender offer will reduce annual pretax interest expense by approximately $33 million and will increase annual net earnings by approximately $0.16 per diluted share. The company expects to record a one-time charge of approximately $0.37 per diluted share associated with the premiums paid above par value and the acceleration of previously deferred finance charges.

"Divesting these non-core cement and concrete assets, at a full and fair valuation, allows us to further enhance our financial strength and strategic focus as the leading aggregates producer in the fastest-growing regions and urban markets of the United States," said Don James, chairman and CEO.

The assets being acquired by Cementos Argos are located in Florida and south Georgia, and include Vulcan's Newberry, Fla., cement plant, Tampa and Port Manatee cement terminals and grinding facilities, 69 ready-mixed concrete sites and 13 concrete block and building material sites. Combined, these assets generated approximately $153 million in net sales and a loss of $1 million in EBITDA for the 9 month period ended Sept. 30, 2013. Vulcan is retaining its cement segment's ground calcium operations.