Southdown Inc. agreed Wednesday to acquire Medusa Corp. for about $1 billion in stock, becoming the nation’s second-largest cement-maker during a boom in road and mass-transit construction.
Medusa holders will receive 0.88 of a share of Southdown stock for each Medusa share, or about $61.22.
That’s 17 percent higher than Medusa’s closing price of $52.25 Tuesday.
The acquisition of Cleveland Heights, Ohio-based Medusa allows Southdown to increase production 52 percent at a low cost as a shortage of cement boosts prices.
“Southdown’s balance sheet was miserable four years ago, but at this point the economics are exceedingly good” said Wyatt Williams, an analyst at Sander Morris Mundy.
Shares of Houston-based Southdown fell 94 cents, to $68.62, on Wednesday; Medusa shares jumped $6.62, to $58.87.
The transaction boosts Southdown’s U.S. production capacity to 10.8 million tons a year from 7.1 million tons, making it second only to Swiss-owned Holnam Inc.
