Shares of Summit Materials Inc. rallied 2.4% in premarket trading on Thursday, following the announcement of a major agreement. The cement maker is set to combine with Argos North America Corp. (Argos USA), the U.S. operations of Colombia-based Cementos Argos S.A. This significant cash and stock deal is valued at approximately $3.2 billion.
Under the terms of this deal, Summit will pay Cementos Argos $1.2 billion in cash and issue 54.7 million of its shares as part of the agreement. Based on Wednesday’s closing price of $36.00 per share, these shares would be valued at about $1.97 billion. This strategic partnership is expected to generate synergies of over $100 million annually.
Expanding Geographic Reach and Cement Enterprise
Summit’s CEO, Anne Noonan, expressed excitement about the combined entity’s prospects: “The transaction will extend our geographic reach into high-growth markets, creating a leading cement enterprise nationwide, and bring together two talent-rich organizations to innovate and deliver value-added solutions for our customers.”
Strong Stock Performance
Summit’s stock has experienced remarkable growth, with a year-to-date increase of 26.8% as of Wednesday. In comparison, the S&P 500 has advanced 16.3% during the same period.
This transformative deal is poised to enhance Summit Materials Inc.’s position in the cement industry and unlock new opportunities for growth and innovation.