Asphalt deal lags, but no sign of cracking

Laurel Sand & Gravel to buy Lafarge's Redland Genstar unit

Road construction

June 26, 1999|By William Patalon III | William Patalon III,SUN STAFF

A deal that would have a Laurel-based quarry company buy the asphalt-making and road-construction business of Reston, Va.-based Lafarge Corp. is taking longer to complete than insiders in the local road-construction business had expected.

Industry sources say Laurel Sand & Gravel has outbid a consortium of local contractors to buy the assets, which Lafarge acquired last year when it bought Towson-based Redland Genstar Inc. as part of a $690 million deal. Lafarge put the asphalt plants and road-paving business up for sale last fall because they did not fit with Lafarge's core mining business -- and because they put the company into direct competition with customers who bought its sand and crushed stone, ingredients of concrete or blacktop for roads.

"There was a significantly higher offer from Laurel Sand & Gravel," said a local industry source.

But industry insiders had thought the deal would be completed around the end of April and now are speculating that the deal hit some kind of snag. It is unclear what the snag, if any, could be.

According to privately available business records, Laurel Sand & Gravel, operated by the Kingdon Gould family, was started in July 1982, and mines sand and gravel for construction and road work. Officials from the company declined to comment.

Lafarge spokesman Ted Pile declined to "develop on market rumors."

The assets under consideration could have significant value: about 11 asphalt plants around the state, the road construction business and some road contracts. Industry sources said the value of the pieces would depend on how they were packaged. The assets themselves are probably worth $20 million, while the business with the road contracts and accounts receivable would be worth $30 million to $40 million, one source estimated.

By acquiring the asphalt-making plants and road business, Laurel Sand & Gravel would gain a captive customer for the so-called "aggregates" -- the stone and other commodities -- that come out of its quarries.

For instance, the ingredients for asphalt include fine sand, crushed rock of different sizes and the tar that acts as a binder and gives the road surfacing its black coloring.

The concoction is heated, applied at 300 degrees and rolled flat. It can be driven on immediately -- an advantage blacktop has over concrete.

The road-construction business in Maryland has perked up in the past few years, though industry officials are concerned that rising costs for the state's transit operations -- which are lumped in with the money for road-construction projects -- could put the squeeze on the road-building business once again.

Pub Date: 6/26/99

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