INDIANAPOLIS (AP) — Vulcan Materials has filed a lawsuit against Martin Marietta in federal court, accusing the smaller gravel and stone supplier of launching an illegal takeover bid using confidential information.
Vulcan strongly recommended to its shareholders Thursday that they not tender their stock to Martin Marietta, which announced a hostile bid earlier this month.
Martin Marietta, based in Raleigh, North Carolina, has said it plans to take a stock offer directly to Vulcan shareholders after Vulcan cut off negotiations.
In the suit, Vulcan alleges that Martin Marietta used confidential Vulcan information in its bid, in violation of confidentiality agreements the companies had reached after they started discussing a possible deal in May 2010. Those talks ended last June.
The "misuse of information" violates federal securities law and also "offends all notions of business ethics and fair dealing," Vulcan said in a complaint filed Tuesday in U.S. District Court for the Northern District of Alabama
Martin Marietta said Thursday that it did not believe there were any significant regulatory or legal hurdles to completing the proposed deal. It said Vulcan's announcement doesn't change its view — and that of many Vulcan shareholders — that the offer "represents a compelling opportunity for Vulcan's shareholders."
"Vulcan misses the point by ignoring the significant incremental value creation inherent in this combination," the company said.
Under the offer, valued at about $4.74 billion, Vulcan Materials Co. shareholders would get half a share of Martin Marietta Materials Inc. stock for each of their Vulcan shares. That offer valued Vulcan at $36.69 per share, a 9.4 percent premium, based on the stock's closing price Dec. 9, the last trading day before Martin Marietta's announcement.
Both companies make construction aggregates like crushed stone, sand and gravel. They also produce asphalt mix, concrete and cement. A combination of the two companies would create the largest U.S. producer of construction aggregates, according to Vulcan.
In addition to alleging the illegal use of information, Vulcan on Thursday said that it had filed a counterclaim in Delaware to enjoin the offer and enforce its rights under federal securities law. Martin Marietta had said when it announced its bid that it had filed lawsuits in both Delaware Chancery Court and New Jersey state court to ensure Vulcan shareholders get a chance to consider its offer.
Vulcan, based in Birmingham, Alabama, called Martin Marietta's offer opportunistic and said it seeks to exploit a historic downturn in U.S. construction spending. It also said the proposed deal undervalues Vulcan and its future prospects, and divestitures that likely would be required by federal regulators would hurt the financial results of the combined company.
Vulcan shares climbed 26 cents to $39.14 in midday trading, while Martin Marietta's stock climbed 6 cents to $76.46. Broader trading indexes were up slightly.