Martin Marietta Materials has been blocked from their hostile takeover of Vulcan Materials for four months, according a a ruling on Friday by Delaware Chancery Court Judge Leo Strine Jr..
Strine states that the block comes because Marietta violated a confidentiality agreement in their bid to purchase the rival gravel-producer. In a 139-page opinion the court released late Friday, the judge wrote:
“Martin Marietta breached the procedural obligations to which it remained subject.”
The gravel-producer made the bid on December 12th, and also filed a suit on the same day, in an attempt to preemptively get the courts to agree that the bid did not violate a confidentiality agreement the two companies signed in may of 2010. Vulcan immediately countersued.
The measure prevents, at least for four months, the combination of the companies, which would lead to the world’s largest producer of crushed stone and gravel.
Martin Marietta’s bid in December was for $4.7 billion, which Alabama-based Vulcan rejected, stating that the bid was inadequate for what the company was actually worth.
The confidentiality agreement was produced when the two companies considered merging int 2010. However, Vulcan walked away when they deemed that Martin’s offers were not in their best interests. They also held concerns that the merger could be brroken up by regulatory hurdles.
The four-day long trial included Judge Strine Jr. probing Martin Mariettsa’s CEO, who, according to the confidentiality agreement, as well as Vulcan’s CEO, was supposedly going to be the CEO of the merged company (a fact that Vulcan was not made aware of in the initial talks).
Martin Marietta has now offered to buy the company at 50 percent of its stock share; that is, they will exchange half a share for each share of Vulcan Materials, and will also pay a quarterly dividend that is equal to 20 cents per Vulcan share.