U.S. CONCRETE, INC. Item 8.01 Other Events
OnJune 6, 2021 ,U.S. Concrete, Inc. , aDelaware corporation ("U.S. Concrete" or the "Company"), entered into an Agreement and Plan of Merger (the "Merger Agreement") with Vulcan Materials Company, aNew Jersey corporation ("Vulcan") andGrizzly Merger Sub I, Inc. , aDelaware corporation and a wholly-owned subsidiary of Vulcan ("Grizzly Merger Sub") pursuant to which Grizzly Merger Sub will merge with and intoU.S. Concrete (the "Merger"), withU.S. Concrete surviving the Merger and becoming a wholly-owned subsidiary of Vulcan. OnJuly 1, 2021 ,U.S. Concrete filed with theU.S. Securities and Exchange Commission ("SEC") its preliminary proxy statement on Schedule 14A (the "Preliminary Proxy Statement") and onJuly 13, 2021 ,U.S. Concrete filed with theSEC its definitive proxy statement on Schedule 14A relating to the special meeting of stockholders of the Company scheduled to be held onAugust 16, 2021 (the "Definitive Proxy Statement") to, among other things, vote on a proposal to adopt and approve the Merger Agreement.
With this filing, the Company is hereby supplementing its disclosure in the Definitive Proxy Statement in connection with litigation brought by certain purported stockholders of the Company, which is described below.
Stockholder Litigation
Since the initial filing of the Preliminary Proxy Statement on Schedule 14A, eleven actions (collectively, the "U.S. Concrete Stockholder Actions") have been filed in federal courts inDelaware, New Jersey ,New York , andPennsylvania by purported stockholders of the Company in connection with the transactions contemplated by the Merger Agreement: Stein v.U.S. Concrete, Inc. , et al. (S.D.N.Y.July 2, 2021 ); Waterman v.U.S. Concrete, Inc. , et al. (S.D.N.Y.July 8, 2021 ); Clark v.U.S. Concrete, Inc. , et al. (D. Del July 9, 2021 ) (the "Clark Action"); Harris v.U.S. Concrete, Inc. , et al. (S.D.N.Y.July 13, 2021 ); Siddall v.U.S. Concrete, Inc. , et al. (D.N.J.July 13, 2021 ); Whitfield v.U.S. Concrete, Inc. , et al (E.D. Pa.July 13, 2021 ); Murphy v.U.S. Concrete, Inc. , et al. (S.D.N.Y.July 14, 2021 ); Kent v.U.S. Concrete, Inc. , et al. (D.N.J.July 27, 2021 ) (the "Kent Action"); Wilhelm v.U.S. Concrete, Inc. , et al. (D. Del July 28, 2021 ) (the "Wilhelm Action"); Brave v.U.S. Concrete, Inc. , et al. (D.N.J.July 30, 2021 ) (the "Brave Action") and Beauregard v.U.S. Concrete, Inc. , et al. (S.D.N.Y.July 30, 2021 ) (the "Beauregard Action"). Each of theU.S. Concrete Stockholder Actions names the Company and its directors as defendants, and the Clark Action names former Company directorWilliam J. Sandbrook as an additional defendant. Each of theU.S. Concrete Stockholder Actions alleges, among other things, that the Preliminary Proxy Statement, or, in the case of the Kent Action,Wilhelm Action , Brave Action andBeauregard Action , the Definitive Proxy Statement, on Schedule 14A is false and misleading and/or omits material information relating to the Company's financial forecasts and financial analyses conducted by the Company's financial advisors. Certain of theU.S. Concrete Stockholder Actions further allege that the defendants violated federal securities laws by failing to disclose certain information in the Definitive Proxy Statement relating to the sales process and alleged conflicts of interests for management, financial projections for the Company provided to the Company's financial advisors, and the data and inputs underlying the financial valuation analyses that support the fairness opinions of the Company's financial advisors. The Clark Action further alleges that the Company's directors breached their fiduciary duties by entering into the Merger Agreement through an unfair process and for inadequate consideration. The plaintiffs in theU.S. Concrete Stockholder Actions, among other things, seek to enjoin the transactions contemplated by the Merger Agreement, an award of attorneys' fees and expenses and, in certain instances, damages in an unspecified amount. While the Company believes that the disclosures set forth in the Preliminary Proxy Statement and in the Definitive Proxy Statement comply fully with all applicable law and denies the allegations in the pending actions described above, in order to moot the plaintiffs' disclosure claims, avoid nuisance and possible expense and business delays, and provide additional information to its stockholders, the Company has determined voluntarily to supplement certain disclosures in the Definitive Proxy Statement related to the plaintiffs' claims with the supplemental disclosures set forth below (the "Supplemental Disclosures"). These Supplemental Disclosures should be read in conjunction with the rest of the Definitive Proxy Statement, which is available at theSEC's website, www.sec.gov, or from the Company's website at https://www.us-concrete.com and which we urge you to read in its entirety. Nothing in the Supplemental Disclosures shall be deemed an admission of the legal merit, necessity or materiality under applicable laws of any of the disclosures set forth herein. To the contrary, the Company and the other named defendants specifically deny all allegations in the complaints, including the allegations that any additional disclosure was or is required or material. To the extent that the information set forth herein differs from or updates information contained in the Definitive Proxy Statement, the information set forth herein shall supersede or supplement the information in the Definitive Proxy Statement. All references to sections and subsections herein are references to the corresponding sections or subsections in the Definitive Proxy Statement, all page references are to pages in the Definitive Proxy Statement, and terms used herein, unless otherwise defined, have the meanings set forth in the Definitive Proxy Statement.
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1. The disclosure under the heading "The Merger - Background of the Merger" is
hereby amended by adding the below sentence to the fourth paragraph on page
22 of the Definitive Proxy Statement under such heading:
As of
2. The disclosure under the heading "The Merger - Background of the Merger" is
hereby amended by adding the below sentence to the fourth full paragraph on
page 23 of the Definitive Proxy Statement:
The Company did not enter into a separate confidentiality agreement with Party A.
3. The disclosure under the heading "The Merger - Background of the Merger" is
hereby amended by adding the below sentence to the seventh full paragraph on
page 23 of the Definitive Proxy Statement:
The Company was not party to a confidentiality agreement with Party B.
4. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Evercore's Financial Analyses - Selected Public Company Trading Analysis" is
hereby amended by deleting the disclosure (including the tables) under this
heading before the paragraph that begins "Based on the multiples it derived
for the selected companies…" on pages 33 to 34 of the Definitive Proxy
Statement, and replacing it with the paragraphs and the tables below:
Evercore reviewed and compared certain financial information of the Company to corresponding financial multiples and ratios for selected publicly traded companies in the heavyside construction materials industry (the "selected companies").
For each of the selected companies, Evercore calculated enterprise value, or "EV" (defined as equity market capitalization plus total debt (including, as applicable, pension and other post-employment benefits liabilities), plus preferred equity and minority interest, less cash and cash equivalents) as a multiple of estimated calendar year 2021 and 2022 earnings before interest, taxes, depreciation and amortization (including, as applicable, adjustments for certain non-recurring items) (for purposes of this section, "Adjusted EBITDA"), which we refer to as "2021E Adjusted EBITDA" and "2022E Adjusted EBITDA", respectively, in each case based on closing share prices as ofJune 4, 2021 . Estimated financial data of the selected companies were based on publicly available research analysts' estimates.
The selected companies and the results of these analyses were as follows:
Selected Public Companies
Financial Metric
EV / EV /
2021E 2022E
Adjusted Adjusted
Company EBITDA EBITDA
Cemex, S.A.B. de C.V. 7.7x 7.4x
CRH plc 9.9x 9.4x
Eagle Materials Inc. 11.6x 10.7x
HeidelbergCement AG 6.0x 5.9x
LafargeHolcim Ltd. 7.6x 7.1x
Martin Marietta Materials, Inc. 16.4x 15.2x
Summit Materials, Inc. 11.1x 10.5x
Vulcan Materials Company 18.2x 16.7x
Financial Metric Low High Median
EV / 2021E Adjusted EBITDA 6.0x 18.2x 10.5x
EV / 2022E Adjusted EBITDA 5.9x 16.7x 9.9x
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5. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Evercore's Financial Analyses - Selected Transactions Analysis" is hereby
amended by deleting the disclosure (including the tables) under this heading
before the paragraph that begins "Based on the multiples it derived from the
selected transactions…" on pages 34 to 36 of the Definitive Proxy Statement,
and replacing it with the paragraphs and the tables below:
Evercore reviewed, to the extent publicly available, financial information related to selected transactions involving publicly-traded target companies in the heavyside construction materials industry announced since 2012 (the "selected transactions").
For each selected transaction, Evercore utilized the publicly available information on transaction value or otherwise calculated the implied enterprise value (defined as the target company's implied equity value based on the consideration paid in the applicable transaction plus total debt, plus preferred equity and minority interest, less cash and cash equivalents) as a multiple of last twelve-month Adjusted EBITDA for the target company at the time of the announcement of the applicable transaction (or in some cases where last twelve-month financial information was not publicly available, as a multiple of other publicly available Adjusted EBITDA). Estimated financial data of the selected transactions were based on publicly available information at the time of announcement of the relevant transaction.
The selected transactions and the results of this analysis was as follows:
Selected Transactions
EV /
Adjusted
Date Announced Target Acquiror EBITDA
Aggregates
May 2021 Lehigh Hanson, Inc. (U.S. West Martin Marietta Materials, 12.1x*
Region) Inc.
May 2021 Tiller Corporation Martin Marietta Materials, 8.5x*
Inc.
March 2021 StonePoint Ultimate Holding LLC Arcosa, Inc. 12.9x
February 2020 Coram Materials Corp. U.S. Concrete, Inc. 9.1x
September 2017 Polaris Materials Corporation U.S. Concrete, Inc. 56.1x
June 2017 Bluegrass Materials Company Martin Marietta Materials, 13.5x*
Inc.
May 2017 Aggregates USA LLC Vulcan Materials Company N.A.
Northwest U.S. Materials) Materials, Inc.)
February 2016 Boxley Materials Company Summit Materials, Inc. N.A.
January 2014 Texas Industries, Inc. Martin Marietta Materials, 18.6x
Inc.
Quarries)
Downstream and Other
May 2021 Cementos Argos S.A. (Ready Mix Smyrna Ready Mix Concrete 10.0x*
Concrete Plants in Dallas,
Texas)
November 2015 Hope Construction Materials Breedon Group 9.1x
February 2015 Lafarge S.A. & Holcim Ltd CRH plc
8.7x
(Assets)
N.A.
Operations)
April 2014 Lafarge S.A. Holcim Ltd. 8.6x
October 2012 Bode Concrete LLC & Bode Gravel U.S. Concrete, Inc. 10.7x
Co.
March 2012 Norris Asphalt Paving Company Summit Materials, Inc. N.A.
Note: "*" means EV/Adjusted EBITDA multiple calculated by dividing the publicly
available transaction value or publicly available estimated transaction value by
the average of publicly available Adjusted EBITDA estimates for the target
company prepared and published by equity research analysts.
--------------------------------------------------------------------------------Financial Metric Low High Median Mean Aggregates EV / Adjusted EBITDA 8.5x 18.6x 12.9x 12.4x Downstream and Other EV / Adjusted EBITDA 8.6x 11.7x 9.5x 9.8x Overall EV / Adjusted EBITDA 8.5x 18.6x 10.7x 11.1x Note: The multiple from the Polaris Materials /U.S. Concrete transaction was excluded from the calculation of the mean and high statistics because the figure was greater than 25.0x and considered not meaningful. Low, high, median and mean statistics excluded multiples from the following transactions because such figures were not available:Aggregates USA LLC / Vulcan Materials Company, Cemex S.A.B. de C.V. (Pacific Northwest U.S. Materials) / HeidelbergCement AG,Boxley Materials Company / Summit Materials, Inc.,Lafarge S.A. (North American Quarries ) /Bluegrass Materials Company ,Cemex S.A. (Austria &Hungary Operations) /Rohrdorfer Group andNorris Asphalt Paving Company / Summit Materials, Inc. 6. The disclosure under the heading "The Merger - Opinion of the Financial Advisors to the Company - Opinion ofBNP Paribas Securities Corp. -
Comparable Trading Multiples" is hereby amended by deleting the paragraph
(including the table) under this heading that begins "The following table
represents the results of this …" on page 44 of the Definitive Proxy
Statement, and replacing it with the paragraph and the tables below:
The following table represents the results of this analysis of the 2021E
EV/EBITDA and 2022E EV/EBITDA multiples as of
2021E 2022E
EV/ EV/
EBITDA EBITDA
Vulcan Materials Company 18.0x 16.3x
Martin Marietta Materials 15.7x 14.2x
Summit Materials 11.5x 10.8x
Eagle Materials 11.4x 10.4x
2021E 2022E
EV/ EV/
EBITDA EBITDA
High 18.0x 16.3x
Low 11.4x 10.4x
7. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Comparable Trading Multiples" is hereby amended by deleting the paragraph
under this heading that begins "Based upon these judgments…" on page 44 of
the Definitive Proxy Statement, and replacing it with the paragraph below:
Based upon these judgments and its professional judgment and expertise,BNP Paribas selected a reference range of multiples of 8.5x to 10.5x and applied such range to the Company's 2021E EBITDA based on the Company forecasts and a reference range of multiples of 7.5x to 9.5x and applied such range to the Company's 2022E EBITDA based on the Company forecasts, to calculate the Company's equity value per share.
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8. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Transactions Multiples" is hereby amended by deleting the table under the
first paragraph under this heading that begins "BNP Paribas performed a
comparable transaction analysis,…" on page 45 of the Definitive Proxy
Statement, and replacing it with the tables below:
Integrated
Announcement Date Acquiror Target EV/LTM EBITDA
May 2021 Martin Marietta Materials Lehigh Hanson (West) 11.8x(1)
May 2021 Martin Marietta Materials Tiller Corporation 8.5x
February 2016 Summit Materials Boxley Materials 8.5x
December 2014 Lone Star Hanson Building Products 9.6x
January 2014 Martin Marietta Materials Texas Industries 18.6x
October 2012 U.S. Concrete Bode Concrete and Gravel 10.7x
(1) Purchase price net of net present value of tax assets.
Aggregates
Announcement Date Acquiror Target EV/LTM EBITDAMarch 2021 Arcosa Stonepoint 13.4x February 2020 U.S. Concrete Coram 9.1x September 2017 U.S. Concrete Polaris 56.1x June 2017 Martin Marietta Materials Bluegrass Materials 13.3x July 2010 Bluegrass Materials CEMEX * February 2010 SPO Partners Ready Mix USA (Quarries Assets) *
* Deal terms not publicly disclosed.
Ready Mix Concrete
Announcement Date Acquiror Target EV/LTM EBITDA
May 2021 SRM Argos Dallas 10.6x
August 2007 Boral Schwarz Readymix 5.4x
March 2007 Titan S&W Ready Mix 4.9x
October 2005 Argos Southern Concrete 7.2x
9. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Transactions Multiples" is hereby amended by deleting the last paragraph on
page 45 of the Definitive Proxy Statement under this heading that begins "BNP
Paribas then made qualitative judgments …" and replacing it with the
paragraph:
BNP Paribas then made qualitative judgments concerning differences between the business, financial and operating characteristics and prospects of the Company and the companies involved in the selected transactions, as well as other factors, in order to provide a context in which to consider the results of the quantitative analysis set forth in the above table. Such qualitative judgments included consideration of (among other factors) the differing sizes, end market exposures, relative product mixes, growth prospects, profitability levels and degrees of operational and financial risk between the Company and the companies included in the selected company analysis. Based upon these judgments, and its professional judgment and expertise,BNP Paribas selected a reference range of multiples of 8.5x-10.5x and applied such range to the Company's LTM EBITDA as ofMarch 30, 2021 to calculate a range of implied equity values per share for the Company.
10. The disclosure under the heading "The Merger - Opinion of the Financial
Advisors to the Company - Opinion of
Information" is hereby amended by deleting the last sentence of the paragraph
that begins "During the two years preceding the date of its opinion…" on page
47 of the Definitive Proxy Statement, and replacing it with the sentence
below (the new text in the Supplemental Disclosures is in boldface and
underlined to highlight the supplemental information being disclosed):
During the two years preceding the date of its opinion,BNP Paribas has not been engaged by Vulcan as a financial advisor or to provide other services to Vulcan, andBNP Paribas has not received any compensation from Vulcan during such period.
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11. The disclosure under the heading "The Merger-Certain Company Forecasts" is
hereby amended and supplemented by including the text and the tables below
(and with respect to the tables, exactly as the tables appear below) on page
49 of the Definitive Proxy Statement prior to the "Financing of the Merger"
heading:
The following is a summary of the Company forecasts prepared by Company
management and provided to the Company Board and its advisors (amounts may
reflect rounding):
Calendar Year Ending December 31
($ in mm) 2021E(1) 2022E 2023E 2024E 2025E
Ready-Mix Revenue $ 1,144 $ 1,279 $ 1,358 $ 1,429 $ 1,487
Aggregates Net Revenue (excluding freight) 172 184 228 243 251
Other Revenue 53 60 60 59 59
Total Revenue $ 1,369 $ 1,523 $ 1,646 $ 1,731 $ 1,797
Costs of Goods Sold $ 1,060 $ 1,178 $ 1,263 $ 1,321 $ 1,373
Selling, General, Administrative and Other
Expenses $ 110 $ 117 $ 122 $ 126 $ 130
Adjusted EBITDA(2) $ 200 $ 228 $ 261 $ 284 $ 295 (1) 2021E Revenue and Adjusted EBITDA figures for the Company include the
impact of cement shortages in the Central region, per Company management.
(2) Adjusted EBITDA represents net income (loss), excluding the impact ofincome taxes, depreciation, depletion and amortization, net interest
expense and certain other non-cash, non-recurring and/or unusual,
non-operating items including, but not limited to: non-cash stock
compensation expense, non-cash change in value of contingent
consideration, acquisition-related costs, officer transition expenses,
purchase accounting adjustments for inventory, and restructuring costs.
Note: Unlevered free cash flows for the Company were calculated by the Company's
financial advisors, based on the Company forecasts, and approved by Company
management for use by the Company's financial advisors for purposes of
their respective opinions and financial analyses.
Evercore calculated the estimated unlevered free cash flows for the Company,
based on information provided by Company management, as set forth in the table
below. Figures for the unlevered free cash flows calculated by Evercore took
into account certain domestic and foreign deferred tax liabilities of the
Company, as provided by Company management.
Calendar Year Ending December 31
($ in mm) 2021E(1) 2022E 2023E 2024E 2025E
Adjusted EBITDA $ 172 $ 228 $ 261 $ 284 $ 295
less taxes 27 36 43 49 58
less capital expenditures 50 67 73 77 80
less Black Bear expansion investment - 41 - - -
less changes in net working capital 11 13 16 10 8
less changes in deferred tax liabilities 2 5 6 7 1
less contingent and deferred consideration in
relation to certain acquisitions previously
completed 9 2 0 - -
less non-cash stock compensation expense - 13 13 14 14
Unlevered Free Cash Flow $ 74 $ 51 $ 108 $ 128 $ 134
(1) Second through fourth quarters of 2021.
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BNP Paribas calculated the estimated unlevered free cash flows for the Company, based on information provided by Company management, as set forth in the table below. Calendar Year Ending December 31 ($ in mm) 2021E 2022E 2023E 2024E 2025E Adjusted EBITDA$ 200 $ 228 $ 261 $ 284 $ 295 less taxes 30 36 43 49 58 less capital expenditures 62 67 73 77 80 less Black Bear expansion investment - 41 - - - less changes in net working capital 6 13 16 10 8 less non-cash stock compensation expense 13 13 13 14 14 Unlevered Free Cash Flow$ 90 (1)$ 58 $ 115 $ 135 $ 135
(1)
third and fourth quarters of 2021.
No Offer or Solicitation / Additional Information and Where To Find It
This communication is for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. This communication is being made in connection with the proposed transaction between Vulcan andU.S. Concrete . In connection with the proposed transaction,U.S. Concrete filed, and may in the future file, certain relevant documents with theU.S. Securities and Exchange Commission ("SEC"), including the Definitive Proxy Statement on Schedule 14A which was mailed toU.S. Concrete stockholders in connection withU.S. Concrete's submission of the transaction for the consideration byU.S. Concrete stockholders at a special meeting to be held onAugust 16, 2021 . This communication is not intended to be, and is not, a substitute for the Definitive Proxy Statement or any other document thatU.S. Concrete has filed or may file with theSEC in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OFU.S. CONCRETE ARE URGED TO READ THE DEFINITIVE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THESEC , AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN IMPORTANT INFORMATION. The Definitive Proxy Statement and other relevant materials and any other documents filed or furnished byU.S. Concrete with theSEC may be obtained free of charge at theSEC's website at www.sec.gov. In addition, copies of the Definitive Proxy Statement and other relevant materials and documents filed byU.S. Concrete with . . .
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