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Vulcan sues over takeover bid

Firm claims Martin Marietta misused confidential info

By Tom Murphy
Associated Press

Indianapolis — Vulcan Materials has filed a lawsuit against Martin Marietta in federal court, accusing the smaller gravel and stone supplier of launching an illegal takeover bid using confidential information.

Vulcan strongly recommended to its shareholders Thursday that they not tender their stock to Martin Marietta, which announced a hostile bid this month.

Martin Marietta, based in Raleigh, N.C., has said it planned to take a stock offer directly to Vulcan shareholders after Vulcan cut off negotiations.

In the lawsuit, Vulcan alleges Martin Marietta used confidential Vulcan information in its bid, in violation of confidentiality agreements the companies had reached after they started discussing a possible deal in May 2010. Those talks ended in June.

The “misuse of information” violates federal securities law and also “offends all notions of business ethics and fair dealing,” according to a Vulcan complaint filed Tuesday in U.S. District Court for the Northern District of Alabama.

Martin Marietta reported Thursday that company leaders do not believe there are any significant regulatory or legal hurdles to completing the proposed deal. The company maintained Vulcan’s announcement didn’t change Martin Marietta’s view, or those of many Vulcan shareholders, that the offer “represents a compelling opportunity for Vulcan’s shareholders.”

“Vulcan misses the point by ignoring the significant incremental value creation inherent in this combination,” according to Martin Marietta.

Under the offer, valued at about $4.74 billion, Vulcan Materials Co. shareholders would get half a share of Martin Marietta Materials Inc. stock for each of their Vulcan shares. That offer valued Vulcan at $36.69 a share, a 9.4 percent premium, based on the stock’s closing price Dec. 9, the last trading day before Martin Marietta’s announcement.

Both companies make construction aggregates such as crushed stone, sand and gravel. They also produce asphalt mix, concrete and cement. A combination of the two companies would create the largest U.S. producer of construction aggregates, according to Vulcan.

In addition to alleging the illegal use of information, Vulcan on Thursday reported it had filed a counterclaim in Delaware to enjoin the offer and enforce its rights under federal securities law. Martin Marietta had reported when it announced its bid that it had filed lawsuits in both Delaware Chancery Court and New Jersey state court to ensure Vulcan shareholders get a chance to consider its offer.

Vulcan, based in Birmingham, Ala., called Martin Marietta’s offer opportunistic and that it sought to exploit a historic downturn in U.S. construction spending. Vulcan also reported the proposed deal undervalues Vulcan and its future prospects, and that divestitures that probably would be required by federal regulators would hurt the financial results of the combined company.

Vulcan has plants in Oconomowoc, Franklin, Kenosha, Oshkosh, Racine and Sussex.

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