UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 11, 2004
VULCAN MATERIALS COMPANY
(Exact Name of Registrant as Specified in its Charter)
New Jersey 001-4033 63-0366371
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(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation) Number)
1200 Urban Center Drive
Birmingham, Alabama 35242
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(Address of principal executive offices) (zip code)
(205) 298-3000
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
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On October 11, 2004, Vulcan Materials Company ("Vulcan") entered
into an Asset Purchase Agreement (the "Asset Purchase Agreement") among Vulcan,
Vulcan Chloralkali, LLC (the "Joint Venture"), a Delaware limited liability
company 51% owned by Vulcan, and Basic Chemicals Company, LLC ("Basic
Chemicals"), a wholly owned subsidiary of Occidental Chemical Corporation
("Occidental Chemical"). Basic Chemicals' obligations to Vulcan are supported by
a guarantee agreement delivered to Vulcan by Occidental Chemical. Other than in
respect of the Asset Purchase Agreement, there are no material relationships
between Vulcan and its affiliates (including the Joint Venture), on the one
hand, and Basic and Occidental Chemical, on the other hand.
The Asset Purchase Agreement provides for the sale of the assets
comprising Vulcan's chemicals business, which consist primarily of chloralkali
plants in Wichita, Kansas, Geismar, Louisiana and Port Edwards, Wisconsin, as
well as the assets of the Joint Venture located in Geismar, Louisiana (the
"Chemicals Business"). In consideration for the sale of the Chemicals Business,
Basic Chemicals: will make an initial cash payment to Vulcan; will assume
certain liabilities relating to the Business, including the obligation to
monitor and remediate historical and future releases of hazardous materials at
or from the three plant sites; and may also be required to make contingent
future payments under two separate earn-out structures. Vulcan will retain
certain other liabilities of the Chemicals Business not being assumed by Basic
Chemicals.
The cash to be paid at closing is estimated to be approximately $214
million (subject to adjustment for changes in the net working capital of the
Chemicals Business), which will result in net cash proceeds to Vulcan of
approximately $155 million after taxes, transaction costs and the cost of
acquiring the 49% of the Joint Venture not owned by Vulcan. The first of the two
earn-outs is based on ECU (electrochemical unit) and natural gas prices during
the five-year period following the closing and is capped at $150 million. The
second of the two earn-outs will be determined based primarily on the
performance of Vulcan's hydrochlorocarbon product HCC-240fa from the closing
through December 31, 2012. Under that earn-out, cash plant margin for the
product in excess of an agreed upon threshold, and after certain capital
expenditures, will be shared equally with Basic. The primary driver for this
earn-out will be growth in HCC-240fa volume. Based on Vulcan's current outlook
for ECU values, natural gas prices and marketplace performance of the HCC-240fa
product, Vulcan projects earn-out payments of approximately $145 million, with a
net present value of approximately $110 million, although there can be no
assurance as to the ultimate amount that will be received.
The closing of the transaction, which is subject to customary
regulatory and other closing conditions, is anticipated to occur during the
first half of 2005.
The Asset Purchase Agreement is attached hereto as Exhibit 99.1 and
is hereby incorporated herein by reference. The description of the Asset
Purchase Agreement contained herein is qualified in its entirety by reference to
such agreement. The press release issued by Vulcan on October 12, 2004 is
attached hereto as Exhibit 99.2 and is hereby incorporated herein by reference.
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ITEM 2.05 COSTS ASSOCIATED WITH EXIT OF DISPOSAL ACTIVITIES
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See Item 1.01 above, which is hereby incorporated herein by
reference. The decision to enter into the Asset Purchase Agreement and sell the
Chemicals Business was based primarily on Vulcan's desire to focus its resources
on its construction materials business. The total cash costs to be incurred in
connection with the transaction are estimated to be approximately $0.02 per
diluted share, and consist primarily of transaction fees. In addition, Vulcan
anticipates a non-cash charge of approximately $0.68 per diluted share, which
reflects the difference between the book value of the assets being sold and the
upfront cash proceeds. The non-cash charge does not take into account any
proceeds from the two earn-outs, which, if earned, will be recognized as income
when received. Vulcan does not currently anticipate incurring any additional
material cash or non-cash items as a result of the transaction.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
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(a) Financial statements of businesses acquired.
- Not Applicable
(b) Pro forma financial information.
- Not Applicable
(c) Exhibits.
99.1 Asset Purchase Agreement dated October 11, 2004
99.2 Press Release Dated October 12, 2004
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunder duly authorized.
` VULCAN MATERIALS COMPANY
By: /s/ Harri J. Haikala
Name: Harri J. Haikala
Title: Assistant General Counsel
Date: October 15, 2004
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EXHIBIT INDEX
99.1 Asset Purchase Agreement dated October 11, 2004
99.2 Press Release Dated October 12, 2004