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(Reuters) -Summit Materials said on Thursday it would buy the U.S. operations of Columbia’s Cementos Argos for about $3.2 billion in cash and stock, in a deal that would make the combined entity the largest U.S.-based cement producer.
The deal will help Summit add four cement plants in the SouthEast, Mid-Atlantic and Texas to its operations, diversifying its footprint and helping the company meet rising demand for construction materials from home builders and infrastructure companies.
Cementos Argos, the core unit of industrial conglomerate Grupo Argos, will own a 31% stake in Summit and receive $1.2 billion in cash payments, subject to certain conditions.
The geographic diversification “reduces the seasonality of our earnings,” Summit said on a call with analysts.
The deal, which is expected to close in the first half of 2024, could lead to annual cost savings of more than $100 million, Summit said.
The combined company will be led by Summit CEO Anne Noonan.
Morgan Stanley is providing committed financing for the transaction in the form of a bridge loan to fund the cash portion of the deal. Morgan Stanley and BofA Securities are expected to jointly provide permanent financing.
Shares of Summit Materials (NYSE:SUM) fell 7.92% in mid-day trading.
