Now is the time to buy stock in U.S. Concrete Inc. (NASDAQ: USCR) after the company announced that it's being purchased by competitor Vulcan Materials Company (NYSE: VMC).
Although U.S. Concrete stock surged after the merger announcement, its current price of $57.14 is still almost 30 percent lower than the $74 per share Vulcan will give U.S. Concrete shareholders as part of the merger agreement. That represents a total equity value of $1.294 billion.
The merger between the two construction aggregate companies is expected to close in the second half of 2021 if it gets U.S. Concrete shareholder approval and regulatory clearance.
"Today's announcement that we are combining with Vulcan, a leading producer of construction aggregates, marks a major milestone in U.S. Concrete's history,” said U.S. Concrete President and CEO Ronnie Pruitt in a company press release. “We are proud of the work our team has accomplished over the past few years to achieve operational excellence and serve our customers and believe combining with Vulcan will provide us with the opportunity to build on our progress. Our combined organization will share an extensive and successful track record of acquisitions and greenfield development.”
What is U.S. Concrete?
Founded in 1999, U.S. Concrete, Inc. is a leading aggregate and ready-mixed concrete supplier that operates through 27 locations serving California, Texas, and the Northeast. In 2020, the Euless, Tex.-based company shipped 12.6 million tons of products.
Its operations in large metropolitan areas like Dallas/Fort Worth, San Francisco, New York City, Philadelphia, and Washington, D.C. complement Vulcan's existing footprint, officials said.
"U.S. Concrete is an important Vulcan customer in a number of key areas, and this transaction is a logical and exciting step in our growth strategy as we further bolster our geographic footprint,” said Tom Hill, the chairman and CEO of Vulcan Materials Company. “This is a merger of two corporate cultures that value people, technology, operating disciplines, customer service and the entrepreneurial spirit, and it positions Vulcan to further drive sustainable, long-term shareholder value."
What is Vulcan Materials Company?
Based in Birmingham, Ala., Vulcan Materials Company has been in operation since 1909. The company is a leading producer of construction aggregates—primarily crushed stone, sand, and gravel—and a major producer of aggregates-based construction materials, including asphalt and ready-mixed concrete.
The merger with U.S. Concrete will help Vulcan expand its service capabilities in ready-mixed concrete, officials said. It will also complement Vulcan’s existing business in California, enhance the company’s position in key Texas cities, and expand its footprint in the New York and New Jersey metro areas.
Vulcan officials also expect the merger to increase its EPS within the first year after closing and increase its EBITDA revenue by about $190 million.
Shares of Vulcan stock saw a 1.48 percent bump after the merger announcement. The stock could also benefit from President Joe Biden’s $2 trillion infrastructure plan.