Vulcan International Essay

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Vulcan International, Inc. Vulcan International is a chemicals (40%) and construction materials (60%) company. Due to the high ratio of transportation costs relative to product value the construction materials industry is highly fragmented, consisting largely of local firms. At the time of the occurrences narrated in this case, Vulcan was the largest construction materials company in the US, controlling about 20% of the market. As of 2007, it had sales of $3.0 billion with approximately 11,000 employees. According to company information, Vulcan • Owns 334 aggregate production and related facilities serving 22 states, the District of Columbia, the Bahamas and Mexico. • Owns 183 stone quarries, 51 sand and gravel plants, 84 sales yards, 47 asphalt plants, and 131 ready-mixed concrete facilities. • Produces crushed stone, sand and gravel, and other construction aggregates. • Is one of the top 5 producers of asphalt and a leading producer of ready-mixed concrete. In 2004 Vulcan acquired at auction for $91 million the White's Uvalde Mines Company which owned major mining interests in the Uvalde County Rock Asphalt region – an area of approximately 75,000 to 100,000 acres containing the only marketable rock asphalt in Texas. White’s Uvalde Mines Company consisted of four rock quarries, four rock asphalt quarries, one trucking company and one specialty asphalt quarry. The acquisition was recorded as follows: Rock Asphalt Other Total (In million dollars) Working Capital $ 2 $ 5 $ 7 Property, plant & Equipment 18 20 38 Land, Mineral Reserves 26 5 31 Goodwill 5 10 15 Total $ 51 $ 40 $ 91 To arrive at the above valuations Vulcan used the expected discounted cash flows (12% discount rate) from the various components of the newly acquired operation. At the time of the

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