* Delaware high court affirms lower court decision
* Ruling ends proxy contest for Vulcan board in 2012
By Tom Hals
DOVER, Del., May 31 Martin Marietta Materials
Inc on Thursday lost what may have been a last-ditch
effort to pursue its $4.5 billion hostile bid for rival Vulcan
Delaware's five-member Supreme Court, in a brief oral ruling
after hearing arguments from both sides, let stand a May 4
decision by the state's Court of Chancery that barred Martin
Marietta for four months from pursuing its bid and proxy contest
for Vulcan's board.
The decision blocks Martin Marietta from proposing nominees
for Vulcan's board of directors at Vulcan's annual stockholders'
meeting on Friday, effectively postponing any proxy contest
until next year. Martin Marietta had proposed candidates for
each of the four seats up for election on the 10-member board.
Martin Marietta, based in Raleigh, North Carolina, made an
unsolicited, all-stock takeover offer for Birmingham,
Alabama-based Vulcan last December, in a bid to become the
world's largest producer of sand, gravel and other construction
materials. Vulcan rejected the bid and said Martin Marietta had
violated confidentiality agreements in preparing to make the
"We will abide by the ruling of the Delaware courts. Beyond
that we have no further comment," said a Martin Marietta
Vulcan said in a statement it welcomed the ruling.
Earlier this week, investment analyst Garik Shmois, who
follows the companies for Longbow Research, told Reuters that he
doubted Martin Marietta would continue to pursue its bid if it
failed to overturn the lower court ruling.
Martin Marietta stock was down 58 cents, or about 0.85
percent, at $67.11 in afternoon trading, while Vulcan was down
50 cents, or 1.4 percent, to $34.52.
In his May 4 ruling, Delaware Chancellor Leo Strine found
that Martin Marietta's hostile bid and proxy contest breached
confidentiality agreements the two companies signed in 2010 when
they engaged in friendly merger talks. As punishment, he barred
the bid and proxy contest for four months.
The proxy contest was central to Martin Marietta's bid
strategy and it had said it wanted the support of Vulcan's board
for its bid. Because Vulcan has a staggered board, it would take
Martin Marietta at least two years to seize control of its
The Delaware Supreme Court heard an hour of arguments on
Thursday. After a 20-minute recess, Chief Justice Myron Steele
announced the lower court ruling was affirmed and that a written
order would be entered later.
Martin Marietta's lawyer, Robert Zimet of law firm Skadden,
Arps, Slate, Meagher & Flom, argued to the justices that Strine
had erred by essentially interpreting their confidentiality
agreement to include a standstill agreement.
Such a provision would prevent either party from pursuing a
hostile takeover after they had exchanged confidential
information as part of friendly merger talks.
Those friendly talks broke down in the middle of last year
over disputes about potential cost savings and over the issue of
who would run a combined company.
Theodore Mirvis of law firm Wachtell, Lipton, Rosen & Katz,
which represented Vulcan, argued that the point of
confidentiality agreements was to prevent information that was
given to a rival from being used in a hostile attack.
"Confidentiality agreements are not suicide pacts," Mirvis
told the court.