On Monday, Summit Materials (NYSE: SUM) said rival Quikrete would acquire the company in a cash deal valued at $11.5 billion, in a move to capitalize on higher demand for building materials.
The sector’s deal-making activity has been heating up due to rising U.S. government infrastructure spending and anticipation of growing material demand.
In October, Summit said it expected public infrastructure to remain a source of steady activity in 2025.
However, the company’s shares have been trading at a discount to its industry peers such as Vulcan Materials (NYSE: VMC) and Martin Marietta Materials (NYSE: MLM).
Privately held Quikrete had approached Summit with an acquisition offer in October, Reuters had reported.
The concrete maker’s $52.50 per share offer represents about a 29.2% premium to Summit’s closing price on October 23, a day before Reuters reported the talks.
Quikrete’s offer equates to about $9.2 billion deal on an equity basis, according to a Reuters calculation.
Atlanta, Georgia-based Quikrete is one of North America’s largest packaged concrete and cement mix manufacturers.
Denver, Colorado-based Summit is a provider of construction materials such as cement, ready-mix concrete, and asphalt.
Morgan Stanley and Evercore served as financial advisors to Summit, while Davis Polk & Wardwell LLP served as its legal advisors.
In a regulatory filing on Monday, Summit said that Quikrete had $9.2 billion of debt financing in place.
“Given several of Summit’s businesses, namely aggregates… Quikrete could look to shop some of its assets,” analysts said in a Jefferies note.
The analysts added that Quikrete seemed most interested in Summit’s cement and ready-mix operations.
The transaction is expected to close in the first half of 2025.
Shares of Summit Materials (NYSE: SUM) fell about 1.7% in afternoon trading.
