US: Cementos Argos, the cement company controlled by Colombia-based Grupo Argos, has entered into a definitive agreement with Summit Materials, under which they will combine their operations in the US. The platform will have a diversified portfolio and a nationwide geographic presence in complementary markets and high-growth urban areas. It will be present in 30 states.
Summit Materials currently operates across aggregate, cement, concrete, and other businesses in the building materials industry, with assets that include 217 aggregate mines, two cement plants along the Mississippi River and approximately 84 concrete plants.
Argos North America has four integrated cement plants, two grinding stations, 140 ready-mix concrete plants, and a distribution network of eight maritime ports and 10 inland terminals.
The agreement will see Cementos Argos receive approximately US$1.2bn and 54.7 million common shares in Summit Materials. This will make it the largest shareholder in Summit Materials, with a 31% stake. The combination will create a company with combined revenues in excess of US$4bn with approximately US$1bn in earnings before interest, tax, depreciation and amortisation (EBITDA). It will be the fourth-largest cement making portfolio in the US, with a capacity of 11.6Mt/yr. It will also be among the largest aggregates and concrete producers. The two companies expect the combination to unlock estimated annual synergies of at least US$100m, with significant realisation within two years.
Juan Esteban Calle, the chief executive officer (CEO) of Cementos Argos, stated, "This combination reaffirms our commitment to growth in the US market while realising and optimising our intention to list the US business on the New York Stock Exchange as the most efficient way to unlock the fundamental value of Cementos Argos' assets and businesses in that country. Being an active player in a publicly-traded leading building materials platform, with a significant component of aggregates and cement on the world's most attractive market, is a pivotal step in the value generation strategy we launched months ago with the SPRINT program for the benefit of all our shareholders. Cementos Argos' participation in Summit Materials will continue to provide our shareholders with significant exposure to the US market."
Anne Noonan, President and CEO of Summit Materials, said, “Our combination with Argos USA marks a significant milestone as we execute against and accelerate our materials-led portfolio strategy. The transaction will extend our geographic reach into high growth markets, creating a leading cement position nationwide, and bring together two talent-rich organisations to innovate and deliver value-added solutions for our customers."
The transaction is expected to close in the first half of 2024, subject to required regulatory approvals and customary closing conditions.