Meadow Valley Sold to Texas Investment Firm

“Ready Mix Inc. will remain publicly traded,” says Neil Berkman, a company spokesman. “[Meadow Valley] formed a special committee to explore a buyout. This was the outcome of that process. We left it open for 45 days for someone else to come in with a higher bid, but nobody has .”

By Tony Illia

Meadow Valley Corp. (NASDAQ: MVCO), the Phoenix-based parent for a ready mix business and heavy highway contractor, is being bought by Insight Equity I, LP, a Southlake, Texas-based private investment entity, for $61.3 million in cash, or $11.25 per share. The company had $116.5 million in assets in the second quarter, with $35 million in equipment and $38.2 million in cash, as per its Securities and Exchange Commission filing. It also had $66.7 million in liabilities and $23 million in accounts payable.

The deal, still subject to shareholder approval, should close by year's end. Meadow Valley's outstanding common shares will be acquired without interest, taking the company private and keeping its management team intact. Meadow Valley stock most recently traded at $10.72 a share, down 23.4% from a 52-week high of $13.99. Some Meadow Valley executives will retain an ownership stake, including president and CEO Bradley E. Larson. The firm has 510 full-time employees.

The deal excludes Ready Mix Inc. (AMEX:RMX), Meadow Valley's ready mix-concrete unit, which operates five concrete plants in Nevada and Arizona.

“Ready Mix Inc. will remain publicly traded,” says Neil Berkman, a company spokesman. “[Meadow Valley] formed a special committee to explore a buyout. This was the outcome of that process. We left it open for 45 days for someone else to come in with a higher bid, but nobody has.”

Meadow Valley has a $150 million work backlog in Phoenix and Las Vegas as of June 30, a 30.4% increase from a year ago. Projects consist of a $67.9 million Interstate-17 widening in Phoenix from the Loop 101 interchange to Jomax Road, and a $57 million I-215 Beltway expansion from Charleston Boulevard to Summerlin Parkway in Las Vegas.  

Meadow Valley has had a mixed financial performance since its first share offering in 1995. In 2001, it completed the complex, $91.8 million "Spaghetti Bowl" interchange near downtown Las Vegas. But the company also ran into big trouble on five road projects worth $51.4 million in New Mexico in the late 1990s. In 2004, it settled three of its original five claims against the New Mexico Dept. of Transportation for $7 million. It bids on many smaller projects now. The strategy has seemingly paid-off, with a 15.5% increase in construction business in 2007 over the prior year, and a 12.6% gross gain in profit.

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“This solid performance helped offset weakness in our construction materials segment caused by the decline in residential construction," says Larson in a statement. “While the outlook for residential construction remains cloudy, we are encouraged by the many opportunities for continued growth in our construction services business.”

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