The third-largest shareholder of Vulcan Materials Co. – also the largest of Martin Marietta Materials Co. – said it backs a merger of the two and will support dissident board candidates unless Vulcan resumes negotiations.
Southeastern Asset Management, which owns 9.8 percent of Vulcan shares, or about 12.7 million of them, said in a filing with the Securities and Exchange Commission that the time for dawdling is over. Southeastern Asset is also the largest shareholder of Martin Marietta, controlling 13 percent of the stock.
“If Vulcan's management and board of directors ignore Martin Marietta’s invitation to resume talks, we will be forced to vote for Martin Marietta's slate of directors and also contemplate publicly sharing these views with other Vulcan Materials stakeholders,” the Memphis-based money manager said in the filing.
Vulcan responded with a statement saying the Martin Marietta offer is too low and that a combination would run afoul of anti-trust regulators and require the fire sale of dozens of high-profit operations.
Southeastern Asset's support for a combination wasn't unreserved. The company said in the SEC filing that a deal would have to make economic sense, and include some provision on an acceptable level of plant sell-offs to quell anti-trust concerns. Those are two of the main reasons Vulcan directors have rejected the plan, with the board saying the financial gain for Vulcan shareholders is too low and that government-ordered sales of quarries and plants would gut the company.
“With significant client investments at each company, Southeastern believes the proposed combination can produce substantial economic benefits for both companies and their shareholders if concluded on the right economic terms,” Southeastern wrote. “Accordingly, Southeastern has encouraged continued discussion between the companies.”