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Martin Marietta nominates directors to Vulcan board

by Lou Whiteman | Published January 25, 2012 at 10:45 AM

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Martin Marietta Materials Inc. is dialing up the pressure on hostile target Vulcan Materials Co., announcing late Tuesday, Jan. 24 it would nominate five candidates to Vulcan's board.

Raleigh, N.C.-based Martin Marietta, which went public with a $4.9 billion tender offer for Vulcan last month after more than 18 months of fruitless negotiations, said it was nominating former Securities and Exchange Commission Commissioner Philip R. Lochner Jr., one-time Novelis Inc. CEO Edward A. Blechschmidt, Capstone Infrastructure Corp. chair V. James Sardo, former Florida Progress Corp. CFO Edward W. Moneypenny and one-time MeadWestvaco Corp. CFO Karen R. Osar to Vulcan's board.

The nominees would replace the five directors whose terms expire this year, and according to Martin Marietta would create a board that would take a more impartial look at its proposal for a merger of the two construction materials suppliers.

"The nominees proposed by Martin Marietta are highly-qualified professionals with proven track records and experience serving on public company boards, and we believe they will consider our business combination proposal in an independent manner and in accordance with their fiduciary duties under applicable law," Martin Marietta CFO Ward Nye said in a statement.

Birmingham, Ala.-based Vulcan, which has rejected the offer as undervaluing the company, replied that "Martin Marietta's slate of handpicked director nominees is a clear attempt by Martin Marietta to push through its inadequate offer to acquire Vulcan at a bargain basement price."

Both companies provide materials including gravel, crushed stone and sand to construction and industrial users. The combined entity would have an enterprise value of $11.4 billion, according to Martin Marietta, and have total mineral reserves of about 28 billion tons.

Vulcan has predicted a combination would face a tough antitrust review. The Department of Justice lent some credence to that argument last week when it issued a second request for information about the proposed deal, but Martin Marietta officials insist any concerns can be resolved.

Meanwhile the pressure on Vulcan is intensifying. Last week hedge fund Southeastern Asset Management Inc., which has large stakes in both companies, in a regulatory filing said it "believes the proposed combination can produce substantial economic benefits for both companies and their shareholders," saying it intends to become "more proactive" in discussions with management about a potential deal.

Southeastern ranks as Martin Marietta's largest shareholder an the third largest holder of Vulcan shares.

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