MW Quikrete bulks up even more ahead of potential construction boom by buying Summit Materials

By Steve Gelsi

With interest rates coming down, the largest concrete company is buying Summit at a deal value of $11.5 billion including debt

Quikrete, the largest cement maker in the U.S., announced Monday plans to buy Summit Materials Inc. for $11.5 billion ahead of a potential rise in construction activity as the cost of financing goes down.

Summit Materials Inc.'s stock $(SUM.AU)$ was down 2.3% in premarket trading, as it fell back from speculative prices after announcing last month that it received a non-binding merger proposal. Reports had surfaced in recent days that Quikrete was circling the company.

Quikrete, a privately held company, said Monday it would pay $52.50 a share for Summit Materials, the Denver-based company that makes cement. Summit's stock closed at $51.66 a share on Friday.

The companies said the deal will create "a vertically integrated, North American, construction materials solutions provider with strong customer relationships and iconic products."

The deal announcement also comes as lower interest rates are expected to boost merger activity due to lower financing costs and spark more construction projects.

The U.S. is also facing a housing shortage, and demand is high for new multi-family units and single-family homes.

Merger transactions in the construction space have been gearing up in recent weeks in anticipation of this boost as well as spending by state and federal agencies on infrastructure improvements.

The Wall Street Journal reported last week that QXO Inc. (QXO) is shopping for a larger acquisition in the business of building product distribution. Reports have surfaced that it has approached Beacon Roofing Supply Inc. (BECN) for an acquisition.

The Summit Materials deal with Quikrete comes about a year after Summit said it would buy Argos USA to create the fourth-largest cement platform in the U.S.

Cementos Argos, the Colombia-based parent of Argos USA, received about 54.72 million shares of Summit Materials stock and $1.2 billion in cash in a deal that valued Argos USA at approximately $3.2 billion.

Summit Materials' stock has risen 34% so far in 2024, while the S&P 500 is up by 25.2%.

-Steve Gelsi

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November 25, 2024 08:22 ET (13:22 GMT)

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