Martin Marietta Materials Prices Notes Offering worth $2.5B


Martin Marietta Materials, Inc. (MLM) announced that the company has priced an offering of three notes worth $2.5 billion.

Shares of the leading supplier of heavy building materials, including aggregates, cement, ready-mixed concrete, and asphalt, gained 2.1% to close at $342.23 on June 21.

MLM plans to use the proceeds from the 2031 and 2051 Notes, along with available cash, to finance the previously announced acquisition of the Lehigh West Region Business. Further, proceeds from the 2023 Notes will be utilized for general corporate purposes, including funding acquisitions and reducing debt. (See MLM stock chart on TipRanks)

The offering comprises 2023 Senior Notes worth $700 million with an interest rate of 0.650%, issued at 99.988% of par value. It also includes two offerings worth $900 million each: one Senior Notes due 2031, with a rate of 2.4% issued at 99.937% of par value, and another Senior Notes due 2051 at a rate of 3.2% issued at 99.197% of par value.

Interest for all the notes will be payable semi-annually, in January and July, starting on January 15, 2022, until their respective maturities. Subject to closing conditions, MLM expects the notes offering to close on July 2.

J.P. Morgan analyst Adrian Huerta recently increased the price target on MLM from $335 to $385 (12.5% potential upside) and reiterated a Hold rating.

Huerta forecast that the new infrastructure bill will bring an incremental 15-20% upside. However, the upside could be halved if there are higher implied corporate taxes.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 4 Holds. The average Martin Marietta Materials analyst price target of $398.60 implies 16.5% upside potential from current levels. Shares of MLM have jumped 63.2% over the past year.

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