Martin Marietta-Vulcan dispute a 'hall of mirrors': judge

Mon Apr 9, 2012 7:19pm EDT

* Companies present closing arguments on hostile bid

* Judge batters both sides during six-hour hearing

* Judge says will not rule immediately

By Tom Hals

WILMINGTON, Del, April 9 (Reuters) - The legal fight over Martin Marietta Materials Inc's $5.4 billion hostile bid for Vulcan Materials Co "is a hall of mirrors," the Delaware judge overseeing the dispute said on Monday.

He added he is unlikely to rule immediately on whether the hostile bid can proceed.

Lawyers for the two makers of building materials presented their closing arguments to Chief Judge Leo Strine of Delaware's Chancery Court, who also must decide if a proxy contest for four seats on the Vulcan board can proceed.

At the center of the dispute are Vulcan's claims that its rival breached two confidentiality agreements that covered information shared between the companies when they entered merger talks in April 2010.

Those talks broke off in June 2011, and Martin Marietta launched its unsolicited, all-stock bid for Vulcan in December. Martin Marietta has argued that creating the world's largest producer of sand, gravel and other building materials would provide up to $250 million in cost savings.

Vulcan rejected that bid and said Martin Marietta, in formulating its hostile bid, used information that was meant to be kept secret and that it also publicly disclosed confidential information.

Strine spent most of the six-hour hearing prodding Robert Zimet of Skadden, Arps, Slate, Meagher & Flom LLP, which represents Martin Marietta, over the way his client disclosed nonpublic information, such as history of the merger talks.

"You're briefs don't come close to justifying the blow-by-blow disclosures," the judge told Zimet. "We're not going to get where you want by acting like I'm a fool," he said after Zimet suggested the disclosures were required by regulators.

Strine wrestled with Zimet over the way Martin Marietta raised its internal projections for synergies after a meeting with Vulcan managers at which confidential information was provided on staffing and software licenses.

Zimet said witnesses attributed higher synergy estimates to a more aggressive process of analysis, not the use of confidential information.

Strine had his doubts.

"I have the testimony from them, but when I have the documents ... none of them back up that story," he said.

Strine also hammered away at Vulcan's legal team.

He sparred with William Savitt of Wachtell, Lipton, Rosen & Katz LLP, who argued the confidentiality agreements did not allow Martin Marietta to use nonpublic information for a hostile bid.

Savitt said that was because the hostile bid was between Marietta and Vulcan's shareholders, not between the two companies that signed the agreement. Strine scoffed at his logic.

"Doesn't that make your reading less obviously the right one?" he asked.

Savitt offered a different interpretation of the agreement after a lunch break, saying the agreement was limited to a combination of companies agreed to by both boards, which still excluded Martin Marietta's hostile bid.

"That is substantially different from what you said before," Strine pointed out.

Strine did not say when he might rule, but suggested it would not be before next week.

The case is Martin Marietta Inc v Vulcan Materials Inc, Delaware Chancery Court, case no. 7102.

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