Chancellor Leo E. Strine, Jr. of the Delaware Chancery Court has temporarily blocked Martin Marietta Materials Inc. from making a hostile bid for Vulcan Materials Co. The judge ruled that Martin Marietta violated a nondisclosure agreement with Vulcan and used confidential information in forming its $5.3 billion bid and proxy fight. The ruling prevents Martin Marietta for a period of four months from prosecuting a proxy contest, making an exchange or tender offer, or otherwise taking steps to acquire control of Vulcan shares or assets and from any further violations of the two confidentiality agreements between the parties.
“We appreciate the Delaware Chancery Court's careful consideration of this matter and are pleased with the decision,” said Vulcan in a statement. “Our Board and management team remain focused on enhancing value for all Vulcan shareholders, including through the aggressive implementation of the Profit Enhancement Plan and Planned Asset Sales that we announced in February. As demonstrated by our strong performance over the last two quarters, Vulcan is well positioned for growth, with superior aggregates operations and operating leverage, and we look forward to continuing to build shareholder value.”
Martin Marietta announced that it will appeal the ruling, and issued the following statement: “Martin Marietta continues to believe in the undeniable strategic merits of a business combination with Vulcan. We are disappointed with the decision rendered by the Delaware Court of Chancery, with which we strongly disagree. After carefully considering our options, Martin Marietta has determined to pursue an appeal and to seek a stay of the Court's ruling pending the outcome of the appeal.
“If we are successful in the appeal process, we expect that the independent candidates nominated by Martin Marietta will stand for election at the Vulcan annual meeting and that we will continue to pursue our exchange offer for Vulcan shares. If we are not successful in the appeal process, we may be required by the terms of the Delaware order to suspend our activities with respect to the proposed business combination with Vulcan for four months, including pursuing the election of our four independent nominees to the Vulcan board and our exchange offer.
“We presently intend to continue our efforts to combine with Vulcan, including pursuing our exchange offer, as soon as we are permitted to do so. We will, of course, make decisions as to how to proceed based on relevant circumstances.”