DENVER - Summit Materials, Inc. (NYSE: SUM), a prominent aggregates and cement producer, announced today that it has entered into a definitive agreement to be acquired by Quikrete Holdings, Inc. The cash transaction is valued at $52.50 per share, or approximately $11.5 billion, including debt. The acquisition price offers a significant premium over Summit's recent stock performance, at roughly 36% above the 90-day volume-weighted average price and 29% above the unaffected share price as of October 23, 2024.
The merger is expected to create a vertically integrated construction materials provider in North America, combining Summit's portfolio with Quikrete's concrete and cement-based products. Howard Lance, Chairman of Summit's Board of Directors, stated that the agreement would deliver substantial and immediate cash value to shareholders. Anne Noonan, President and CEO of Summit, highlighted the transaction as a reflection of the company's strategic and operational success.
Will Magill, CEO of Quikrete, expressed enthusiasm for the acquisition, noting Summit's complementary product offerings and the shared vision for the future. The transaction, which is anticipated to close in the first half of 2025, is subject to approval by Summit shareholders, regulatory clearances, and other customary closing conditions. Summit will become a privately held subsidiary of Quikrete, and its shares will cease trading on the NYSE.
Cementos Argos, Summit's largest shareholder, has agreed to vote in favor of the transaction. Financing for the acquisition has been secured by Quikrete, with commitment letters in place, and the deal is not contingent on financing. Morgan Stanley (NYSE:MS) & Co. LLC and Evercore are serving as financial advisors to Summit, while Wells Fargo (NYSE:WFC) is advising Quikrete.
This announcement is based on a press release statement. The terms and conditions of the definitive transaction agreement will be detailed in Summit's forthcoming 8-K report to the U.S. Securities and Exchange Commission.
In other recent news, Summit Materials Inc (NYSE:SUM). has been involved in preliminary discussions about a non-binding acquisition proposal, with no further updates planned at this time. The company's financial consultants for the matter are Morgan Stanley & Co. LLC and Evercore. The company has also made significant changes to its fiscal year, transitioning from a 52-53 week period ending near December 31st to a standard calendar year ending December 31st.
In other financial developments, Summit Materials reported strong Q3 results, despite weather-related challenges, setting record quarterly adjusted EBITDA margins of 28.3%. The company raised its 2024 EBITDA outlook to between $970 million and $1 billion, indicating approximately 7% growth. Summit Materials also attracted interest from Quikrete in a potential acquisition, with Loop Capital suggesting a takeout price over $50 would align with the company's valuation.
Lastly, the company has nearly $740 million in cash reserves earmarked for strategic acquisitions and capital expenditures. Loop Capital expressed confidence in Summit Materials, raising its price target to $54 from $49 while maintaining a Buy rating. These recent developments reflect Summit Materials' ability to navigate challenges while maintaining operational excellence and pricing discipline.
InvestingPro Insights
The acquisition of Summit Materials by Quikrete at $52.50 per share aligns closely with recent market trends and the company's financial performance. According to InvestingPro data, Summit's stock was trading near its 52-week high, with the price at 96.58% of its peak. This strong performance is reflected in the company's impressive returns, including a 14.55% gain over the past month and a 47.98% increase over the last year.
Summit's financial health appears robust, supporting the attractiveness of the acquisition. The company's revenue growth of 49.49% over the last twelve months and a 47.35% increase in quarterly revenue demonstrate strong operational performance. This growth trajectory is likely a key factor in Quikrete's decision to acquire Summit at a premium.
InvestingPro Tips highlight that analysts anticipate sales growth in the current year and have revised their earnings upwards for the upcoming period. These positive projections align with the acquisition's timing and valuation. Additionally, the tip indicating that liquid assets exceed short-term obligations suggests a solid financial foundation, which could have been attractive to Quikrete.
It's worth noting that InvestingPro offers 13 additional tips for Summit Materials, providing investors with a more comprehensive analysis of the company's position and potential. These insights could be particularly valuable for understanding the full context of this significant acquisition in the construction materials sector.
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