(Reuters) - Grupo Argos, a Colombian industrial conglomerate spanning energy and building materials, has approached U.S. aggregates and cement maker Summit Materials Inc about a merger, people familiar with the matter said on Thursday.
The deal would bolster Grupo Argos’ U.S. footprint and illustrate how building materials companies in emerging markets are seeking to become consolidators of their sectors in more mature economies.
Grupo Argos sees value in combining Cementos Argos SA, one of its subsidiaries, with Summit Materials and gaining scale, the sources said. However, there is no certainty that Summit Materials will negotiate a deal with Grupo Argos, the sources added.
The sources asked not to be identified because the matter is confidential. Grupo Argos and Summit Materials did not immediately respond to requests for comment.
Summit Materials shares rose 14 percent to $15.61 on the news, giving the company a market capitalization of $1.8 billion. The company’s debt pile stood at $1.9 billion as of the end of March. Its shares had underperformed peers Martin Marietta Materials Inc and Vulcan Materials Co so far this year, as the cement sector becomes increasingly competitive.
Last month LafargeHolcim, the world’s largest cement maker, said it expected demand to continue rising this year, pushing aside concerns about slowing economies and trade tensions weighing on the construction industry.
Based in Denver, Colorado, Summit Materials makes aggregates which it supplies across the United States and in British Columbia, Canada, as well as cement, which it supplies to surrounding states along the Mississippi River, from Minnesota to Louisiana.
The company was founded in 2009 by current Chief Executive Tom Hill and a group of investors, including Blackstone Group LP and Silverhawk Capital Partners LLC. It grew quickly, partly thanks to acquisitions, and listed in the U.S. stock market in 2015.
Cementos Argos is the fourth largest cement producer in the southeast of the United States, with four plants, according to its websites. It is the second largest aggregates producer in the United States, with a total installed capacity of 18 million cubic meters of concrete per year. It has a market capitalization of 9.7 trillion Colombian pesos ($3 billion).
Grupo Argos owns 58 percent of Cementos Argos. In turn, Grupo Argos is 35.4 percent-owned by investment holding company GrupoSURA.
Reporting by Greg Roumeliotis and Harry Brumpton in New York; Editing by Dan Grebler and James Dalgleish
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