Argos Proceeds On Cemex-Blazed Trail
- Written by Concrete News
Merger and acquisition activity is off to a rapid clip in 2014, as a second year of broad-based housing starts kicks in, construction materials production assets recover from recession-skewed valuations, and major domestic and international operators stake claim to new markets, or rethink their scope.
Aside from a Portland Cement Association-projected 8 percent cement shipment increase this year over 2013 and Martin Marietta Materials-Texas Industries merger announced at press time (note report on page 11), a major Sunshine State deal indicates market health: Six years after its Florida Rock Industries takeover, debt reduction-minded Vulcan Materials Co. has seized an opportunity to unload the Jacksonville-based company’s charter ready mixed, block, and cement production and distribution assets, gross cash proceeds totaling $720 million.
The Florida and south Georgia properties’ suitor, Cementos Argos of Columbia, was virtually unknown in the U.S. a decade ago. It chartered Houston-based Argos USA in a late-2005, $245 million deal for Southern Star Concrete, a major player in Dallas and Houston ready mixed, with additional plants in Arkansas. Argos moved into the Carolinas the following spring, acquiring mainstay Ready Mixed Concrete Co. for $435 million. Five years later, it established a bridge between the Carolinas and Texas, adding much of Lafarge North America’s Southeast ready mixed and cement businesses for $760 million.
With a projected first quarter closing, the Vulcan agreement brings Argos past the $2 billion mark in announced U.S. transactions over an eight-year window. It will add to the Argos USA portfolio 69 ready mixed concrete plants, with a 375-mixer truck fleet and 4.3 million yd. annual production capacity; 13 concrete block plants with capacity upward of 110 million units; integrated dry-process cement plant in Newberry, Fla., with 1.6-million ton installed annual capacity; plus, two clinker grinding facilities and marine terminals in Tampa and Port Manatee, with combined 1.85-million ton capacity. Vulcan is retaining all Sunshine State aggregate operations, and entering a 20-year supply agreement netting the divested concrete facilities’ owner sand, gravel and crushed stone at market prices.
This transaction fits perfectly with the company’s growth strategy, not only for the size and quality of the assets but also because of its privileged location, the potential and its complementary operation with our current assets,” affirms Cementos Argos CEO Jorge Mario Velásquez. “We are doubling our cement production capacity in the United States, in a market like Florida, where the growth forecast for the coming years is expected to double the already encouraging growth estimates of the country. These assets will allow us to generate important synergies and significant interconnected logistics in order to add value for our shareholders.
Estimated deliveries from the newly acquired Vulcan plants will see the producer’s annual U.S. log eclipse 17 million yd. of ready mixed, easily placing Argos USA among volume leaders Cemex USA, Oldcastle Materials and Holcim (US)/Aggregate Industries. Behind the Carolinas, Atlanta, Alabama and Texas, Florida becomes the fourth market or region where Argos USA concrete and cement properties overlap or border those of Cemex USA.
Argos is not alone among integrated cement and concrete peers for whom Cemex has blazed U.S. trails since assimilating Southdown, RMC and Rinker Materials businesses from 2000 through 2007—as GCC America (Great Plains), Votorantim Cement North America (Florida, Great Lakes) and Cementos Lima-backed Drake Cement (Arizona) demonstrate.
Led by building and construction prospects across the Sun Belt, it is good to see the U.S. as a competitive melting pot for Latin American and European multinational producers, plus homegrown standouts like Martin Marietta, MDU Resources, Texas Industries, U.S. Concrete and Vulcan Materials.