Pit & Quarry, October 2018
MANAGEMENT MERGERS ACQUISITIONS With M A activity on the rise aggregate operations should perform their due diligence when selecting the right path for their business BY MARK E BATTERSBY ergers and acquisitions M As have long played an important role in the lifecycle of many businesses M in the aggregate industry An M A can help an operation expand move into new areas and become more efficient with one simple transaction For many crushed stone sand and gravel operations an M A is a proven strategy for cutting overhead costs increasing efficiency and battling a larger competitor A number of M A transactions offer opportunities such as the U S Justice Department requiring CRH to divest Rocky Gap Quarry in Virginia as it attempted to acquire Pounding Mill Quarry Corp or the two quarries Martin Marietta was required to sell off as part of its planned purchase of Bluegrass Materials Co Whats more consulting firm Deloitte reported in its annual comprehensive look that M A activity is expected to accelerate this year Whether the recent spate of M As is attributable to last Decembers Tax Cuts Jobs Act TCJA the cash it freed up or the new lower corporate tax rate M As are on the upswing with a great deal of the action being smaller deals The use of warranty and indemnity W I insurance to remove all or a great deal of the risk in M As is yet another factor in the reported upsurge VIVA LA DIFFERENCE While often synonymous the terms merger and acquisition are separate transactions A merger occurs when two separate entities combine to create a new joint organization in which both theoretically are equal partners An acquisition refers to the purchase of one entity by another A new business does not emerge from an acquisition rather the acquired business or target is often consumed and ceases to exist with its assets becoming part of the acquiring business The term M As can include a number of other transactions including Consolidation A consolidation creates a new entity where shareholders in both entities approve the consolidation after which they receive equity shares in the new firm Tender offer In a tender offer one business offers to purchase the outstanding stock of the other business for a specific price The acquiring business communicates the offer directly to the other business shareholders bypassing the management and board of directors Obviously this usually involves larger often publicly traded businesses 32 PIT QUARRY October 2018 pitandquarry com ISTOCK COM PEUCETA Divestitures are sometimes required to complete a deal involving crushed stone sand and gravel operations PROFITING TOGETHER WITH
You must have JavaScript enabled to view digital editions.
