September 30, 2023
Business Companies

Cementos Argos To Merge U.S. Operations with Summit Materials

Medellin-based multinational cement/concrete giant Cementos Argos announced September 7 that it just signed a deal to merge its U.S. operations with Denver, Colorado-based Summit Materials — creating one of North America’s biggest cement/concrete companies.

The merged operation would represent pro-forma annual revenue of more than US$4 billion and approximately US$1 billion in annual earnings before interest, taxes, depreciation and amortization (EBITDA), according to a joint press statement from the companies.

The new operation would create the fourth-largest cement platform in the U.S., with a capacity of approximately 11.6 million tons per year, as well as the sixth-largest aggregates platform in the U.S., “with reserves of more than 5.5 billion short tons and annual sales of about 70 million short tons,” according to the companies.

The operation also would create “one of the largest concrete producers, with more than 220 plants and more than 1,800 mixer trucks,” according to the companies.

The combined company will operate in 30 states, with “full vertical integration from quarries to end customer” in many of those states.

“This combination enables estimated annual synergies of at least US$100 million, with significant realization over the course of two years, derived from an optimized supply, efficiencies in operations, a greater use of the network of import terminals and a proven platform to increase the use of alternative fuels.

“Likewise, it leverages on a cement supply agreement from the Cartagena [Colombia] plant and improves the ability to search for attractive growth opportunities, both organic and inorganic, in the business lines and in others such as supplementary cementing materials and new sources of aggregates,” according to the companies.

Under the deal, Cementos Argos will receive approximately US$1.2 billion in cash and 54.7 million shares of Summit Materials common stock, “the value of which, at a price-per-share of US$36, amounts to approximately US$2 billion,” according to Argos.

“Upon closing of the transaction, Cementos Argos will become the largest shareholder of Summit Materials with 31% interest in the combined company,” the companies added.

Following regulatory approvals, the transaction is expected to close in the first half of 2024, according to the companies.

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