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From Antitrust Law Daily, April 26, 2018

Martin Marietta’s acquisition of Bluegrass Materials conditionally approved

By Wendy Biddle, J.D.

The Department of Justice has conditionally approved the proposed $1.625 billion acquisition by Martin Marietta Materials, Inc. of two aggregate competitors. The settlement will allow Martin Marietta to move forward with its acquisition of Bluegrass Materials from LG Panadero, but must divest certain assets to approved buyers (U.S. v. Martin Marietta Materials, Inc., Case No. 1:18-cv-00973).

The settlement "will ensure that aggregate customers, and ultimately taxpayers, in Georgia and Maryland continue to benefit from vigorous competition for this critical input used in road construction," said Makan Delrahim, Assistant Attorney General in charge of the Department of Justice Antitrust Division, in announcing the action.

Martin Marietta, a North Carolina corporation, is a leading supplier of aggregate and heavy building operations that does business in 26 states. Bluegrass is headquartered in Jacksonville, Florida, and operates 17 rock quarries, one sand plant, and two concrete manufacturing plants in 6 states. Bluegrass is owned by Panadero Aggregates Holdings which is owned by LG Panadero. Both Martin Marietta and Bluegrass produce and sell aggregate, which is used in asphalt and read- mix concrete primarily used in road and other construction.

On June 26, 2017, Martin Marietta announced it would acquire Bluegrass and Panadero Aggregates from LG Panadero. The U.S. and Maryland filed a civil antitrust complaint seeking to enjoin the proposed acquisition, alleging the likely effect of the acquisition would be to substantially lessen competition in the production and sale of Department of Transportation-qualified aggregate around Fulton County, Georgia and Washington County, Maryland. For customers around the Forsyth and Fulton counties of Georgia and the Washington County area of Maryland, Martin Marietta and Bluegrass are two of the three sources of DOT-approved aggregate sources. The loss of competition would likely result in increased prices and decreased customer service in those areas. Additionally, the barrier to entry into the production and sale of DOT-qualified aggregate is high because quarries are difficult to locate and permit, as well as expensive and therefore would not adequately mitigate the anticompetitive effects of the acquisition.

Pursuant to the settlement, Martin Marietta can move forward with its acquisition of Bluegrass Materials from LG Panadero after divesting the lease to its Forsyth quarry in Georgia to CRH unit Midsouth Paving Inc. or an alternate acquirer approved by the U.S. The settlement also calls for the divestiture of Bluegrass's Beaver Creek quarry to an approved buyer

The proposed settlement would also prevent Martin Marietta from reacquiring the divested properties for period of 10 years, but after five years the final judgment may be terminated by the United States if the judgment is deemed no longer necessary or in the public interest.

A hold separate stipulation and order was filed to ensure, prior to the divestitures, that the Divestiture Assets remain independent, economically viable, and ongoing business concerns that will remain independent and uninfluenced by Defendants, and that competition is maintained during the pendency of the ordered divestitures.

Attorneys: Kerrie J. Freeborn, U.S. Department of Justice. Gary Honick, Office of the Attorney General, for the State of Maryland. Jon Brett Dubrow (McDermott Will & Emery LLP) for Martin Marietta Materials, Inc. Jeffrey L. White (Weil, Gotshal & Manges, LLP) for LG Panadero, L.P., Panadero Corp., Panadero Aggregates Holdings, LLC and Bluegrass Materials Co., LLC.

Companies: Martin Marietta Materials, Inc.; LG Panadero, L.P.; Panadero Corp.; Panadero Aggregates Holdings, LLC; Bluegrass Materials Co., LLC

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