Academic journal article Journal of the International Academy for Case Studies

Merger Talks Gone Awry: Martin Marietta Materials Hostile Bid for Vulcan Materials

Academic journal article Journal of the International Academy for Case Studies

Merger Talks Gone Awry: Martin Marietta Materials Hostile Bid for Vulcan Materials

Article excerpt


The primary subject matter of this concerns the legal use and interpretation of Non-Disclosure Agreements (NDA) and Joint Defense and Confidentiality Agreement (JDA) executed by the companies when they were on good terms. Secondary issues examined include proxy fights, hostile takeovers, and the aggregates industry dynamics. The case has a difficulty level appropriate to senior-level undergraduates or first year MBA students. The case designed for the business law courses is designed to be taught in a single 75-minute class period and requires no more than 2 hours of outside preparation by students.


In May 2012, Lynne Davis, an extremely small investor in Vulcan Materials, was faced with a proxy vote on a hostile takeover offer from Martin Marietta Materials. Vulcan and Martin Marietta were number one and two respectively in the U.S. aggregates (sand, rock, gravel) industry. They had entered into friendly merger negotiations, but the talks broke down in June of 2011. In December 2011, Martin made an unsolicited exchange offer of 0.50 shares of its stock for each share of Vulcan's stock, and litigation from both companies soon ensued. By February 2012, both companies initiated lawsuits, with some shareholders doing the same. Lynne had followed the litigation and reviewed the exchange offer but was undecided whether to vote her proxy for 4 new directors proposed by Martin Marietta or with Vulcan's nominees. As the June 2012 meeting approached, Lynne tried to sort through the myriad claims to reach her decision.


As she walked down her driveway on a windy spring day, Lynne Davis cringed at the sight of the large envelope protruding from her mailbox. She took a quick glance at the return address titled Vulcan Materials Company which confirmed this was more proxy material related to Martin Marietta Materials hostile takeover of Vulcan. She had acquired 8 shares over 20 years earlier as a young employee at Vulcan's Birmingham, Alabama headquarters. Since that time she never gave much thought to the shares except each year when she received the notice of the annual shareholders' meeting. However, since the beginning of 2012 both companies had waged a proxy fight for the votes of Vulcan shareholders.

In early 2010, the companies had entered talks to discuss the merger of the two largest firms in the aggregates industry. After the talks broke down late in 2011 Martin Marietta made an unsolicited exchange offer for all outstanding shares of Vulcan's common stock at a fixed exchange ratio of 0.50 shares of Martin Marietta common stock. Vulcan's board immediately rejected the offer, and the proxy fight began with both companies filing lawsuits prior to the 2012 shareholders' meeting. Lynne opened the packet as she walked back up her driveway. A white proxy card was on top of the proxy material. She knew that the contents of the packet would include Vulcan's request to vote this white card just as Martin Marietta's material asked her to vote the blue card included with its proxy. She decided to review the events leading up to the June 1st vote before deciding how to vote her proxy.


Aggregates were used in a variety of industries, but primarily in construction projects. Aggregates included crushed stone, sand and gravel. Demand for the industry's products was derived from different construction projects including airports, highways, water and sewer systems, manufacturing facilities, railroad track ballast, residential and commercial buildings. The industry consisted of over 5,000 companies in the U.S. In recent years, growth was typically accomplished through acquisition of existing facilities. The regulatory environment of aggregate producers often required dozens of permits to operate a single facility. Producers needed to navigate state and Federal regulations related to air quality, water quality, noise, zoning and safety. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed


An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.