Eagle Materials Inc. Announces Agreement to Acquire Kosmos Cement Plant and Related Assets

Eagle Materials Inc. (NYSE: EXP) announced today that the Company has entered into a definitive agreement with Kosmos Cement Company (a joint venture between CEMEX S.A.B. de C.V. and Buzzi Unicem S.p.A.), to purchase Kosmos’ Louisville, Kentucky cement plant, as well as related assets, which include seven distribution terminals and substantial raw material reserves. The plant has the capacity to produce nearly 1.7 million tons of cement annually.

The purchase price is $665 million, subject to customary post-closing adjustments. Eagle anticipates certain tax benefits arising from the transaction, the net present value of which is expected to be approximately $120 million. The transaction is expected to close in the first quarter of calendar 2020, following the receipt of required regulatory approvals and other customary closing conditions. Calendar 2019 normalized revenue and EBITDA before synergies for the acquired assets is estimated to be $170 million and $56 million, respectively. The acquisition will increase Eagle's US cement capacity by roughly 25% and is expected to be accretive to earnings and cash flow in the first full year of ownership.

Michael Haack, Eagle Materials Inc. President and Chief Executive Officer, said the agreement represents a significant milestone in the company's growth strategy. “At Eagle we have been disciplined in the strategic growth of our integrated network of cement plants in the US heartland, and the Kosmos facilities are a natural fit. The Kosmos facilities are high-quality, low-cost assets that align with our long-term strategic growth plans and meet our criteria for new investment. These assets will also enable us to participate more significantly in US construction and infrastructure market growth.”

Mike Nicolais, Eagle Materials Board Chairman, added, “This acquisition is an exceptional geographic fit with our existing system of heartland-US cement assets. It not only extends our reach in key US markets, but also enhances the near and long-term cash flow generation capabilities of our businesses. Also this acquisition is especially timely in light of our previously announced plans to separate our Heavy Materials and Light Materials businesses into two independent, publicly traded corporations. Moreover, this investment reflects the balanced approach Eagle takes in capital allocation between profitable growth and the return of capital to shareholders, and combined with the more than $320 million of capital we returned to shareholders in the first half of the year, it reflects the strong cash flow generation capabilities of our businesses.”