Eagle Materials Inc. entered into a definitive agreement with Lafarge North America to purchase Lafarge's Sugar Creek, Missouri and Tulsa, Okla., cement plants, as well as related assets, which include six distribution terminals, two aggregates quarries, eight ready-mix concrete plants and a fly ash business.
Eagle will also enter into a transition sales agreement to supply certain Lafarge operations with cement for four to five years, and an agreement with a Lafarge affiliate to supply low-cost alternative fuels to the acquired operations.
The purchase price is $446 million, subject to customary post-closing adjustments. Trailing 12-month revenues through June 30, 2012, for the cement plants and related assets were $178 million. The acquisition will increase Eagle's U.S. cement capacity by roughly 60 percent. The transaction is expected to close in November or December 2012, pending regulatory approvals.
Steven Rowley, Eagle Materials Inc. president and chief executive officer, said the agreement represents a major milestone event for the company.
“Our stated strategy has been to grow the cement and aggregates side of our business,” Rowley said. “Our first priority has been to acquire cement plants that connect but do not overlap with the market reach of our existing plants. These two high-quality Lafarge cement plants are a compelling fit with our objectives – and the transaction meets our stringent criteria for new investment. These assets will allow us to participate more fully in the U.S. construction industry recovery; additionally this transaction further positions the company near energy growth markets where there is growing demand for our specialty oil well cement along with our newly offered high-quality northern white frac sand. These new cement, concrete and aggregates assets will immediately contribute earnings and cash flow for our stockholders; moreover they will provide significant near-term opportunities for synergies and earnings growth.”