TRG | The Bottom Line – 12/8

Who knew boring old rocks could create such an M&A buzz? Heavy material M&A activity has picked up a feverish pace going into the close of 2023. Privately-held SRM Concrete has emerged as Texas’ largest ready-mix concrete producer after acquiring 82 plants and 11 loading sites from Vulcan Materials (VMC), a deal completed just in time for the Thanksgiving holiday. These assets largely were inherited from VMC’s 2021 U.S. Concrete acquisition. This is not the first transaction between the two in 2023, as SRM picked up VMC’s USC-Atlanta ready mix concrete sites in NY, NJ and PA in January. While SRM continues to build its U.S. ready-mix concrete empire, we expect VMC to deploy proceeds to its core aggregates and related operations. On the heels of the VMC/SRM deal, Martin Marietta Materials (MLM) made waves with the November 21st announced sales of one cement plant, four TX gulf coast import terminals, and 20 ready-mix concrete plants in Southern TX to CRH plc (CRH) for $2.1B. TRG continues to believe this is a “win-win” transaction for both MLM and CRH. Valuation at 12.4x EBITDA was attractive for MLM. We believe CRH, with an established market presence in the central/southern TX market, is the right owner of these assets, complementing its existing footprint and should improve the overall ecosystem. Upon completion of the acquisitions, MLM debt level should end around 1.1x, leaving plenty of dry power to continue its aggregate-focused investing.