June 11 - Overview
-- U.S. aggregates producer Martin Marietta Materials Inc. recently
lost its bid to overturn a Delaware Court ruling that barred the company from
pursuing its bid and proxy contest for Vulcan Materials Co. until mid
-- The ratings on Martin Marietta, including the 'BBB+' corporate credit
rating, remain on CreditWatch with negative implications, where they were
initially placed on Dec. 13, 2011.
-- We will resolve our CreditWatch after meeting with management to
review its financial policy and operating performance expectations.
On June 11, 2012, Standard & Poor's Ratings Services said its ratings on
Raleigh, N.C.-based Martin Marietta Materials Inc., including the 'BBB+'
corporate credit rating, will remain on CreditWatch with negative
implications, where they were initially placed on Dec. 13, 2011, following
Martin Marietta's announcement of its unsolicited offer to acquire Vulcan
The continued CreditWatch listing is despite recent court rulings that
effectively prohibit Martin Marietta from pursuing its bid of Vulcan Materials
for at least four months and potentially for a significantly longer period
given timing and cost considerations of restarting such efforts after the
court's ruling expires.
Despite Martin Marietta's unsolicited bid for Vulcan being terminated for at
least the next several months and perhaps longer, we remain concerned
regarding the combination of Martin Marietta's future financial policy given
its willingness to assume more debt leverage in the Vulcan acquisition, as
well as the impact that continued weak aggregates markets will have on its
overall financial risk profile.
Despite the greatly reduced likelihood of a combination of Martin Marietta and
Vulcan Materials, the continued CreditWatch listing reflects our concern
regarding Martin Marietta's financial risk policies given its recent
willingness to significantly increase debt leverage to over 6x (before
synergies) in conjunction with the Vulcan bid. In addition, we believe the
company's overall financial risk profile will continue to be negatively
affected by the ongoing weak aggregates and construction markets, which we
believe will prevent credit measures from improving to levels consistent with
the 'BBB+' rating.
In resolving the CreditWatch, which we expect to occur within the next 45
days, we will meet with management and review its financial policies and
operating expectations, given still weak construction markets and continued
uncertainty over the timing and size of Federal and State infrastructure
spending, including prospects for an extension and increase in existing
Federal highway appropriations.
We believe a lowering of he rating is likely to be limited to one notch.
Related Criteria And Research
-- Key Credit Factors: Business And Financial Risks In The Global
Building Products And Materials Industry, Nov. 19, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April 15, 2008
Ratings On CreditWatch Negative
Martin Marietta Materials Inc.
Corporate Credit Rating BBB+/Watch Neg/A-2
Senior Unsecured BBB+/Watch Neg
Commercial Paper A-2/Watch Neg
Complete ratings information is available to subscribers of RatingsDirect on
the Global Credit Portal at www.globalcreditportal.com. All ratings referenced
herein can be found on Standard & Poor's public Web site at
www.standardandpoors.com. Use the Ratings search box located in the left