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Martin Marietta and Vulcan Materials upgraded

May, 23 2012

(RALEIGH, N.C.)  --  Shares of asphalt, concrete and stone suppliers Martin Marietta Materials Inc. and Vulcan Materials Co. rose Monday after an analyst upgraded both companies to "Buy" from "Hold."

The companies are locked in a legal fight over Martin Marietta's nearly $5 billion hostile bid to buy the larger Vulcan Materials which a court has halted temporarily.

Both companies make construction aggregates like crushed stone, sand and gravel, as well as concrete and other building materials. Vulcan said combining the two would create the largest U.S. producer of construction aggregates.

KeyBanc Capital Markets analyst Rodny Nacier said Monday that both companies could benefit from stronger sales volumes, and higher prices, for aggregate stone materials. He said that improvements in the construction industry should help boost results.

Nacier said that a Delaware court's decision to halt Martin Marietta's takeover for four months removes "noise" that distracts from Vulcan's business.

Nacier set a target of $43 on Vulcan Materials and $84 on Martin Marietta.

Martin Marietta, which said it is the nation's second-largest supplier of construction aggregates, offered stock worth $36.69 per share for Vulcan in December, valuing Vulcan at about $4.74 billion.

Vulcan sued Martin Marietta, claiming the bid was illegal because it relied on information Martin Marietta had no right to. Martin Marietta is now appealing the Delaware court decision to halt its takeover attempts. Martin Marietta said that if its appeal is successful, it plans to resume its pursuit and will try to get its candidates elected to Vulcan's board of directors.

Shares of Vulcan jumped $1.76, or 5 percent, to close at $36.35. The stock has traded between $25.06 and $48.09 over the last year.

Martin Marietta's stock rose 70 cents to $69.09. Shares have traded between $59.93 and $90.57 over the last year.

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