Plans to Separate Heavy Materials and Light Materials Businesses; Reviewing Alternatives for Oil and Gas Proppants
The Company also announced that it is actively pursuing alternatives for its Oil and Gas Proppants business with the support of an independent financial advisor. Additionally, the Company’s Board will continue to evaluate any opportunity to create value that may arise prior to completion of the separation.
Today’s announcement follows a thorough review of strategic, operational
and financial alternatives to enhance shareholder value by the Company’s
Board and management team, with the support of independent financial and
legal advisors and input from the Company’s largest shareholders,
“We believe that by pursuing the actions announced today the Eagle Board
is taking significant steps to unlock the Company’s inherent value,”
Benefits of Separation
Following completion of the separation, each company is expected to be well capitalized, generate strong free cash flows, be well positioned for future growth and be best-in-class in its respective industry. Eagle believes that as two separate companies, each business will be able to:
Two Focused Businesses
Eagle – Heavy Materials
After the separation, the Company’s existing Heavy Materials business, a U.S.-heartland cement-plant system with complementary concrete and aggregates operations, is expected to continue to produce strong margins and significant cash flows. Eagle will remain focused on low-cost production, operate in key U.S. geographies with favorable market dynamics and drive profitable growth through both strategic acquisitions and the organic development of its asset network. The business enjoys long-lived, owned raw material reserves that will sustain its operations over the long term. This business will operate as a distinct pure-play, U.S.-only cement company with excellent future prospects as the largest U.S.-owned producer.
Eagle – Light Materials
Upon separation, Eagle’s existing Light Materials business is expected to continue to be a benchmark producer of gypsum wallboard and recycled paperboard. This business has a long track-record of superior margin performance, driven by its sustainable low-cost producer positions in U.S. sunbelt markets, and has uniquely distinguished itself through industry business cycles. The business includes an integrated paperboard mill that utilizes advanced technologies to supply the wallboard plants with high-performing, low-cost facing paper. The business enjoys long-lived raw material reserves as well as industry leading levels of customer satisfaction.
Oil and Gas Proppants Business
In connection with the separation, Eagle is actively pursuing alternatives for its Oil and Gas Proppants business with the support of an independent financial advisor. There can be no assurance that this process will result in any particular action being taken, nor can there be any assurance regarding the timing of any such action. Eagle does not intend to disclose developments regarding this process if and until an action is announced, or the process is otherwise concluded.
Management Structure and Governance
Upon completion of the separation, each company will have its own management team and an independent board of directors that will include members of the current Eagle Board. Full management teams and boards for both companies will be named in the months leading up to the formal separation.
Transaction Details, Conditions and Timing to Close
Upon completion of the transaction, each company is expected to be
publicly listed and traded on nationally recognized stock exchanges.
Both companies will remain headquartered in
The transaction is subject to certain conditions, including, among
others, obtaining final approval by Eagle’s Board of Directors, receipt
of a favorable opinion of tax advisors with respect to the tax-free
nature of the transaction for U.S. federal income tax purposes and
effectiveness of a Form 10 registration statement to be filed with the
This press release includes certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, including statements about expected results, the strategic portfolio review process, potential transactions and other matters that are not historical facts. Forward-looking statements may be identified by the context of the statement and generally arise when the Company is discussing its beliefs, estimates or expectations. These statements are not historical facts or guarantees of future performance but instead represent only the Company’s belief at the time the statements were made regarding future events which are subject to certain risks, uncertainties and other factors, many of which are outside the Company’s control. Actual results and outcomes may differ materially from what is expressed or forecast in such forward-looking statements. All forward-looking statements made herein are made as of the date hereof, and the risk that actual results will differ materially from expectations expressed herein will increase with the passage of time. The Company undertakes no duty to update any forward-looking statement to reflect future events or changes in the Company’s expectations. Please refer to the publicly filed documents of the Company, including the most recent Forms 10-K and 10-Q, for additional information about the Company and about the risks and uncertainties related to the Company’s business which may affect the statements made in this press release.
For additional information, contact at 214-432-2000.
Robert S. Stewart
Executive Vice President, Strategy, Corporate Development and Communications
Joele Frank, Wilkinson Brimmer Katcher
Jim Golden / Clayton Erwin / Sophie Throsby
(212) 355 4449