Martin Marietta Materials Inc. issued the following statement in response to a new investor and shareholder presentation released by Vulcan Materials Co.
"Vulcan's shareholder presentation suffers from numerous inaccuracies and mischaracterizations, which we will address promptly. Most importantly, the basic theme – the past is prologue to the future – is fundamentally flawed.
"Pointing to past cyclical recoveries in this industry, Vulcan's presentation touts its performance on historical recoveries but in footnotes Vulcan admits that ‘historical performance is not a guarantee or assurance of future performance nor that previous results will be attained or surpassed.'
"This last statement recognizes the reality that today's Vulcan is not the same company that came through the past cyclical recoveries. Specifically, Vulcan today — and on a standalone basis going forward — is burdened with:
- A highly levered balance sheet.
- Cash constraints – which required the virtual elimination of its dividend.
- A "junk" credit rating.
- A steadily falling unaffected stock price – reflecting Vulcan's risk profile and lack of profitability.
- A "too little, too late" cost reduction program – which itself is fundamentally misconceived.
- And most significantly, no clear prospect, as to either timing or level, of the life-line it is looking to for rescue of its standalone future value (inadvisably in light of the circumstances) – a strong and sustained economic recovery.
"In short, Vulcan fails to factor into its overstated view of its potential value, and takes no responsibility for, the reality of today's Vulcan or the challenges it faces.
"We also can't help but note that despite Vulcan's statements that its stock is trading at a 10-year low, its current unaffected EBITDA multiple is meaningfully higher than Martin Marietta or Vulcan's historical multiples, fully reflecting any potential higher standalone growth prospects.
"The Martin Marietta proposal offers a reality-based opportunity to Vulcan shareholders who will receive an upfront premium, 58 percent ownership in the combined company, a meaningful dividend and the synergies and any cyclical recovery that would benefit the combined company."
As previously announced, on Dec. 12, 2011, Martin Marietta commenced an exchange offer in which each outstanding share of Vulcan will be exchanged for 0.50 Martin Marietta shares.