As filed with the Securities and Exchange Commission on June 12, 2007

Registration No. 333-142060

 

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

Amendment No. 1

To

 

Form S-4

 

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

 

 

 

 

VIRGINIA HOLDCO, INC.

(Exact name of Registrant as specified in its charter)

 

 

c/o Vulcan Materials Company

1200 Urban Center Drive

Birmingham, Alabama 35242

205-298-3000

(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

 

 

 

William F. Denson, III, Esq.

Vice President and Secretary

Virginia Holdco, Inc.

c/o Vulcan Materials Company

1200 Urban Center Drive

Birmingham, Alabama 35242

205-298-3000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

 

 

 

Copies to:

 

 

 

 

 

Approximate date of commencement of proposed sale of the securities to the public:  As soon as practicable after this Registration Statement becomes effective and all other conditions to the proposed mergers described herein have been satisfied or waived.

 

If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.  o

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  o

 

 

 

 

The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

SUBJECT TO COMPLETION DATED JUNE 12, 2007

 

 

TO THE SHAREHOLDERS OF

FLORIDA ROCK INDUSTRIES, INC.

 

FLORIDA ROCK MERGER PROPOSED — YOUR VOTE IS VERY IMPORTANT

 

Dear Shareholder,

 

After careful consideration, the board of directors of Florida Rock Industries, Inc. (“Florida Rock”), by a unanimous vote of directors voting, has adopted an agreement and plan of merger with Vulcan Materials Company (“Vulcan”). As part of the transaction, Florida Rock and Vulcan will become subsidiaries of Virginia Holdco, Inc., a new holding corporation (“Holdco”), and Florida Rock common shareholders will have the right to elect to receive either $67.00 in cash, without interest, or 0.63 of a share of Holdco common stock for each share of Florida Rock common stock that they own. The elections are subject to proration so that, in the aggregate, 70% of all outstanding shares of Florida Rock common stock will be exchanged for cash and 30% of all outstanding shares of Florida Rock common stock will be exchanged for shares of Holdco common stock. In addition, Vulcan common shareholders will receive one share of Holdco common stock for each share of Vulcan common stock that they own. Approximately 13,034,069 shares of Holdco common stock will be issued in the merger in exchange for shares of Florida Rock common stock. Upon completion of the transaction, we estimate that Florida Rock’s former shareholders will own approximately 12%, and former Vulcan shareholders will own approximately 88%, of the common stock of Holdco. The common stock of Holdco is expected to be listed on the New York Stock Exchange under Vulcan’s current ticker symbol, “VMC,” Vulcan is expected to be renamed “VMC Corp.” and Holdco is expected to be renamed “Vulcan Materials Company” after the closing of the transaction.

 

Florida Rock will hold a special meeting of shareholders at which we will ask our shareholders to approve the merger agreement. Information about this meeting and the transaction is contained in this proxy statement/prospectus. In particular, see “Risk Factors” beginning on page 14. We urge you to read this proxy statement/prospectus, and the documents incorporated by reference into this proxy statement/prospectus, carefully and in their entirety.

 

The approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Florida Rock common stock. No vote of Vulcan shareholders is required in order to approve the merger agreement. Pursuant to a support agreement with certain members and affiliates of the Baker family, such members and affiliates of the Baker family have agreed to vote certain of the shares of Florida Rock common stock beneficially owned by them, representing approximately 9.9% of the outstanding shares of Florida Rock common stock, in favor of the approval of the merger agreement.

 

Whether or not you plan to attend the special meeting, please vote as soon as possible to make sure that your shares are represented at that meeting. If you do not vote, it will have the same effect as voting against the merger proposal.

 

The Florida Rock board of directors unanimously recommends (with the undersigned, Edward L. Baker and Thompson S. Baker II abstaining) that you vote FOR the approval of the merger agreement.

 

Sincerely,

 

John D. Baker II

President and Chief Executive Officer

Florida Rock Industries, Inc.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of the securities to be issued under this proxy statement/prospectus or determined if this proxy statement/prospectus is accurate or complete. Any representation to the contrary is a criminal offense.

 

This proxy statement/prospectus is dated          , 2007, and is first being mailed to shareholders of Florida Rock on or about          , 2007.

 

FLORIDA ROCK INDUSTRIES, INC.
155 East 21st Street, Jacksonville, Florida 32206

 

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD          , 2007

 

To the Shareholders of Florida Rock Industries, Inc.:

 

A special meeting of the shareholders of Florida Rock Industries, Inc. will be held at          , on          , 2007 at   a.m., local time, for the following purposes:

 

1. to consider and vote upon the approval of the Agreement and Plan of Merger, dated as of February 19, 2007, as amended on April 9, 2007, by and among Vulcan Materials Company, a New Jersey corporation, Florida Rock Industries, Inc., a Florida corporation, Virginia Holdco, Inc., a New Jersey corporation, Virginia Merger Sub, Inc., a New Jersey corporation, and Fresno Merger Sub, Inc., a Florida corporation;

 

2. to consider and vote upon an adjournment of the special meeting, if necessary or appropriate, to permit further solicitation of proxies if there are not sufficient votes at the special meeting to approve the first proposal described above; and

 

3. to transact such other business as may properly come before the special meeting and any adjournment or postponement thereof.

 

We have included a copy of the Agreement and Plan of Merger as Annex A to the accompanying proxy statement/prospectus. The proxy statement/prospectus further describes the matters to be considered at the special meeting.

 

The approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Florida Rock common stock. Pursuant to a support agreement with certain members and affiliates of the Baker family, such members and affiliates of the Baker family have agreed to vote certain of the shares of Florida Rock common stock beneficially owned by them, representing approximately 9.9% of the outstanding shares of Florida Rock common stock, in favor of the approval of the merger agreement. The affirmative vote of a majority of the votes cast at the special meeting is required to approve the adjournment of the special meeting, if necessary or appropriate, to solicit additional proxies.

 

The board of directors of Florida Rock unanimously (with Edward L. Baker, John D. Baker II and Thompson S. Baker II abstaining) recommends that you vote FOR the approval of the Agreement and Plan of Merger at the special meeting and FOR the approval of the adjournment of the meeting, if necessary or appropriate, to solicit additional proxies.

 

Only shareholders of record at the close of business on          , 2007 will be entitled to notice of and to vote at the special meeting and any adjournments or postponements thereof. To vote your shares, please complete and return the enclosed proxy card or voting instruction card, or, if available, submit your voting instruction by telephone or through the Internet. You may also cast your vote in person at the special meeting. Please vote promptly whether or not you expect to attend the special meeting.

 

By Order of the Board of Directors,

 

John D. Milton, Jr.

Executive Vice President

Treasurer and Chief Financial Officer

 

          , 2007

 

 

 

 

 

REFERENCES TO ADDITIONAL INFORMATION

 

This proxy statement/prospectus incorporates important business and financial information from other documents that are not included in or delivered with this proxy statement/prospectus. This information is available to you without charge upon your written or oral request. You can obtain those documents incorporated by reference in this proxy statement/prospectus or other information about the companies that is filed with the Securities and Exchange Commission (the “SEC”) under the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), by requesting them in writing or by telephone from the appropriate company at the following addresses and telephone numbers:

 

 

IF YOU WOULD LIKE TO REQUEST ANY DOCUMENTS, PLEASE DO SO BY [          ], 2007 IN ORDER TO RECEIVE THEM BEFORE THE SPECIAL MEETING.

 

For additional information on documents incorporated by reference in this proxy statement/prospectus, please see “Where You Can Find More Information.”

 

TABLE OF CONTENTS

 

 

LIST OF ANNEXES

 

 

The questions and answers below highlight only selected procedural information from this proxy statement/prospectus. They do not contain all of the information that may be important to you. You should read carefully the entire proxy statement/prospectus and the additional documents incorporated by reference into this proxy statement/prospectus to fully understand the voting procedures for the special meeting and the procedures for making cash and share elections.

 

 

 

 

 

By mail:

 

The Bank of New York
Florida Rock Industries, Inc.
P.O. Box 859208
Braintree, MA 02185-9208

By overnight courier:

 

The Bank of New York
Florida Rock Industries, Inc.
161 Bay State Drive
Braintree, MA 02184

By hand:

 

The Bank of New York
Reorganization Services
101 Barclay Street
Receive and Deliver Window
Street Level
New York, NY 10286

By facsimile transmission:
(for eligible institutions only)

 

781-930-4903

To confirm facsimile only:

 

(Tel.) 781-930-4900

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

D.F. King & Co., Inc.
48 Wall Street
New York, NY 10005
Toll Free: 800-347-4750
Banks and Brokers Call Collect: 212-269-5550

 

SUMMARY

 

THE COMPANIES

 

Vulcan Materials Company

 

Florida Rock Industries, Inc.

 

Virginia Holdco, Inc.

 

Virginia Merger Sub, Inc.

 

Fresno Merger Sub, Inc.

 

THE MERGERS

 

Effect of the Mergers (see page 24)

(1)	To be renamed “Vulcan Materials Company”
(2)	To be renamed “VMC Corp.”

 

 

Vulcan Common Shareholders to Receive Shares of Holdco Common Stock (see page 24)

 

Stock Exchange Listing and Stock Prices (see page 74)

		Vulcan				Florida Rock				Vulcan Pro Forma				Florida Rock Pro
Date		Closing Price				Closing Price				Equivalent(1)				Forma Equivalent(2)
February 16, 2007		$	111.81			$	46.96			$	111.81			$	70.44
June 11, 2007		$	116.85			$	68.08			$	116.85			$	73.62

(1)		The pro forma equivalent per share value of Vulcan common stock is calculated by multiplying the Vulcan closing price by the Vulcan merger exchange ratio of 1.0.
(2)		The pro forma equivalent per share value of Florida Rock common stock is calculated by multiplying the Vulcan closing price by the Florida Rock merger exchange ratio of 0.63.

 

 

 

Florida Rock Board of Directors’ Reasons for the Merger (see page 31)

 

Opinion of Florida Rock’s Financial Advisor (see page 34)

 

Vulcan Board of Directors’ Reasons for the Merger (see page 45)

 

Florida Rock Shareholder Vote Required (see page 20)

 

Interests of Certain Persons in the Florida Rock Merger (see page 46)

 

The Support Agreement (see page 71)

 

The Shareholders Agreement (see page 72)

 

Comparison of Shareholder Rights (see page 87)

 

No Appraisal Rights (see page 61)

 

Board of Directors and Management After the Mergers (see page 52)

 

Regulatory Approvals and Conditions to Completion of the Mergers (see pages 55 and 62)

	•	approval of the merger agreement by the Florida Rock shareholders;

	•	absence of any legal prohibition on completion of the transaction;
	•	receipt of opinions of counsel to Vulcan (with respect to Vulcan common stock) and Florida Rock (with respect to Florida Rock common stock) to the effect that the exchanges of Vulcan common stock or Florida Rock common stock for Holdco common stock will qualify for tax-free treatment for U.S. federal income tax purposes; and
	•	material accuracy, as of the closing, of the representations and warranties made by the parties and material compliance by the parties with their respective obligations under the merger agreement.

 

Termination of the Merger Agreement; Fees Payable (see pages 66 and 67)

 

THE SPECIAL MEETING

 

Special Meeting (see page 20)

 

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

 

How the Financial Data Was Prepared

 

Selected Historical Financial Data of Vulcan

		Three Months Ended
		March 31								Years Ended December 31
		2007				2006				2006				2005				2004				2003				2002
		(Amounts in thousands, except per share data)
Statement of Earnings Data:
Net sales		$	630,187			$	642,272			$	3,041,093			$	2,614,965			$	2,213,160			$	2,086,944			$	1,980,576
Depreciation, depletion, amortization and accretion			60,801				53,673				224,677				220,488				209,989				216,122				205,185
Operating earnings(1)			137,146				99,014				695,059				476,378				401,933				378,318				375,575
Interest expense, net			5,312				3,638				20,139				20,519				34,681				49,635				51,251
Earnings from continuing operations before income taxes(2)			133,036				107,469				703,461				480,237				375,566				335,080				329,195
Earnings from continuing operations			89,339				71,905				477,498				343,835				261,213				237,513				233,236
Basic earnings per share from continuing operations		$	0.94			$	0.72			$	4.89			$	3.37			$	2.55			$	2.33			$	2.29
Diluted earnings per share from continuing operations		$	0.91			$	0.70			$	4.79			$	3.30			$	2.52			$	2.31			$	2.28
Basic weighted average common shares outstanding			95,172				100,552				97,577				102,179				102,447				101,849				101,709
Diluted weighted average common shares outstanding			97,778				102,346				99,777				104,085				103,664				102,710				102,515
Balance Sheet Data (end of period):
Cash and cash equivalents		$	69,960			$	80,343			$	55,230			$	275,138			$	271,450			$	147,769			$	127,008
Working capital(3)			239,358				596,915				243,686				585,708				991,270				507,290				491,979
Total assets			3,570,915				3,406,957				3,427,834				3,588,884				3,665,133				3,636,860				3,448,221
Long-term debt			321,503				322,859				322,064				323,392				604,522				607,654				857,757
Total shareholders’ equity			2,094,556				2,190,282				2,010,899				2,126,541				2,013,975				1,802,836				1,696,986
Book value per common share		$	21.98			$	21.77			$	21.26			$	21.20			$	19.62			$	17.71			$	16.71

(1)		Operating earnings during the year ended December 31, 2006 include a pretax gain of $24.8 million related to the sale of contractual rights to mine the Bellwood Quarry in Atlanta, Georgia. Operating earnings also reflect pretax gains on the sale of property, plant and equipment, including real estate sales, as follows: for the years ended December 31, 2006 — $5.6 million; 2005 — $8.3 million; 2004 — $23.8 million; 2003 — $27.8 million; 2002 — $9.1 million; and for the three months ended March 31, 2007 — $46.4 million; 2006 — $0.8 million.

(2)		Earnings from continuing operations before income taxes include pretax gains of $28.7 million and $20.4 million during the years ended December 31, 2006 and 2005, respectively, and pretax gains of $0.7 million and $12.2 million during the three months ended March 31, 2007 and 2006, respectively, related to the increase in the carrying value of the ECU (electrochemical unit) earn-out received in connection with the 2005 sale of Vulcan’s Chemicals business. Earnings from continuing operations are presented before the cumulative effect of accounting changes.

(3)		Working capital as of December 31, 2004 includes the total assets and total liabilities, including noncurrent assets and noncurrent liabilities, of Vulcan’s former Chemicals business, which was sold in 2005. At December 31, 2004, the assets and liabilities of this business were classified as assets held for sale ($458.2 million) and liabilities of assets held for sale including minority interest ($188.4 million).

 

Selected Historical Financial Data of Florida Rock

		Six Months Ended March 31								Years Ended September 30
		2007				2006				2006				2005				2004				2003				2002
		(Amounts in thousands, except per share data)
Statement of Earnings Data:
Net sales		$	529,865			$	652,334			$	1,328,271			$	1,126,608			$	926,609			$	728,674			$	707,459
Depreciation, depletion, amortization and accretion			38,742				35,592				74,687				64,558				63,628				63,126				66,152
Operating earnings(1)			107,491				152,125				319,475				249,473				175,928				112,299				106,447
Interest (income) expense, net			(1,956	)			(1,069	)			(2,902	)			295				1,340				(659	)			2,412
Earnings from continuing operations before income taxes			109,795				157,199				330,084				255,632				177,953				116,308				106,320
Earnings from continuing operations			70,489				99,825				211,409				157,653				113,670				75,601				68,895
Basic earnings per share from continuing operations		$	1.08			$	1.52			$	3.22			$	2.41			$	1.75			$	1.17			$	1.08
Diluted earnings per share from continuing operations		$	1.06			$	1.49			$	3.16			$	2.36			$	1.72			$	1.15			$	1.06
Basic weighted average common shares outstanding			65,447				65,618				65,621				65,306				64,810				64,420				63,934
Diluted weighted average common shares outstanding			66,634				66,892				66,829				66,764				66,133				65,464				65,144
Balance Sheet Data (end of period):
Cash and cash equivalents		$	57,818			$	43,025			$	93,353			$	68,921			$	45,891			$	38,135			$	3,845
Working capital			116,177				116,494				153,925				121,545				39,435				94,371				39,406
Total assets			1,318,937				1,163,313				1,236,260				1,052,991				934,929				886,154				733,349
Long-term debt			16,308				16,525				16,423				18,437				41,927				118,964				43,695
Total shareholders’ equity			990,102				836,612				915,896				747,933				620,880				574,422				510,647
Book value per common share		$	15.01			$	12.72			$	14.02			$	11.41			$	9.55			$	8.89			$	7.94

(1)		Operating earnings include pretax gains on the sale of real estate for the fiscal years ended September 30 as follows: 2006 — $3.6 million; 2005 — $6.4 million; 2004 — $13.2 million; 2003 — $3.6 million; 2002 — $2.8 million. Operating earnings include pretax gains on the sale of real estate for the six month periods ended March 31 as follows: 2007 — $4.0 million; 2006 — $1.7 million.

 

Selected Unaudited Pro Forma Condensed Combined Financial Data of Holdco

		For the Three				For The Year
		Months Ended				Ended
		March 31,				December 31,
		2007				2006
		(Amounts in thousands,
		except per share data)
Net sales		$	920,169			$	4,354,198
Depreciation, depletion, amortization and accretion			93,965				360,589
Operating earnings			189,905				953,309
Interest expense, net			49,787				199,983
Earnings from continuing operations before income taxes			142,197				789,574
Earnings from continuing operations			97,610				541,997
Basic earnings per share from continuing operations		$	0.91			$	4.93
Diluted earnings per share from continuing operations		$	0.89			$	4.83
Weighted-average common shares outstanding — basic			107,636				110,041
Weighted-average common shares outstanding — diluted			110,242				112,241

		As of March 31, 2007
		(Amounts in thousands,
		except per share data)
Cash and cash equivalents		$	127,778
Working capital			(857,633	)
Total assets			9,078,281
Long-term debt			2,337,811
Total shareholders’ equity			3,515,126
Book value per common share		$	32.62

 

COMPARATIVE PER SHARE DATA

		For the Three
		Months Ended				For the Year
		March 31,				Ended December 31,
Vulcan Historical per Share Data		2007				2006
Basic earnings from continuing operations		$	0.94			$	4.89
Diluted earnings from continuing operations			0.91				4.79
Cash dividends			0.46				1.48
Book value (as of March 31, 2007)			21.98

		For the Three				For the Twelve
		Months Ended				Months Ended
		December 31,				September 30,
Florida Rock Historical per Share Data		2006				2006
Basic earnings from continuing operations		$	0.68			$	3.22
Diluted earnings from continuing operations			0.67				3.16
Cash dividends			0.15				0.60
Book value (as of March 31, 2007)			15.01

		For the Three
		Months Ended				For the Year Ended
		March 31,				December 31,
Unaudited Pro Forma Combined per Share Data		2007				2006
Basic earnings from continuing operations		$	0.91			$	4.93
Diluted earnings from continuing operations			0.89				4.83
Cash dividends			0.41				1.31
Book value (as of March 31, 2007)			32.62

		For the Three				For the Twelve
		Months Ended				Months Ended
		December 31,				September 30,
Unaudited Pro Forma Equivalent per Share Data for Florida Rock		2006				2006
Basic earnings from continuing operations		$	0.57			$	3.10
Diluted earnings from continuing operations			0.56				3.04
Cash dividends			0.26				0.83
Book value (as of March 31, 2007)			20.55

 

In addition to the other information included in, incorporated by reference in and found in the Annexes attached to, this proxy statement/prospectus, including the matters addressed in the “Information Regarding Forward-Looking Statements” on page 18, you should carefully consider the following risk factors in deciding whether to vote for approval of the merger agreement. Other than risks that could apply to any issuer or any offering, all material risks relating to the transaction are discussed below. In addition, you should read and consider the risks associated with the businesses of Florida Rock and Vulcan. Risks relating to Florida Rock can be found in Item 1A — Risk Factors, in Florida Rock’s Annual Report on Form 10-K for the year ended September 30, 2006, which has been filed with the SEC and is incorporated by reference to this proxy statement/prospectus. Risks relating to Vulcan can be found in Item 1A — Risk Factors, in Vulcan’s Annual Report on Form 10-K for the year ended December 31, 2006, which has been filed with the SEC and is attached as Annex G to this proxy statement/prospectus. You should also read and consider the other information in this proxy statement/prospectus and the other documents incorporated by reference in this proxy statement/prospectus. Please see “Where You Can Find More Information” on page 104. Additional risks and uncertainties not presently known to Florida Rock or Vulcan or that are not currently believed to be important also may adversely affect the transaction and Holdco following the mergers.

 

Florida Rock shareholders may not receive the form of merger consideration that they elect for all their shares and may receive in part a form of consideration that has lower value.

 

The merger agreement contains provisions that are designed to ensure that, in the aggregate, 70% of Florida Rock shares will be converted into cash and 30% of Florida Rock shares will be converted into Holdco common shares. The value of the share consideration at the time of the mergers may be higher than the value of the cash consideration at such time, or vice versa. If elections are made by Florida Rock shareholders to receive more cash or more shares of Holdco than these percentages, either those electing to receive cash or those electing to receive shares of Holdco, respectively, will have the consideration of the type they selected reduced by a pro rata amount, and will receive a portion of their consideration in the form that they did not elect to receive. Accordingly, it is likely that a substantial number of Florida Rock shareholders will not receive a portion of the merger consideration in the form that they elect and that the consideration they do receive will have a lower value than what they elected to receive.

 

Pursuant to the support agreement, among other things, the Baker Shareholders irrevocably elect to receive Holdco common stock in exchange for shares of Florida Rock common stock representing approximately 30% of the Florida Rock common stock beneficially owned by Edward L. Baker, John D. Baker II and Baker Holdings, L.P. in the Florida Rock merger, subject to proration like all Florida Rock shareholders.

 

Because the exchange ratio is fixed, the market value of Holdco common stock issued to you may be less than the value of your shares of Florida Rock common stock.

 

Florida Rock shareholders who receive shares in the Florida Rock merger will receive a fixed number of shares of common stock of Holdco rather than a number of shares with a particular fixed market value. The market values of Vulcan and Florida Rock common stock at the time of the mergers may vary significantly from their prices on the date the merger agreement was executed, the date of this proxy statement/prospectus or the date on which Florida Rock shareholders vote on the Florida Rock merger. Because the exchange ratio will not be adjusted to reflect any changes in the market value of Vulcan or Florida Rock common stock, the market value of the Holdco common stock issued in the Florida Rock merger and the Florida Rock common stock surrendered in the Florida Rock merger may be higher or lower than the values of such shares on such earlier dates, and may be higher or lower than the $67.00 to be paid to Florida Rock shareholders in the cash portion of the Florida Rock merger. Stock price changes may result from a variety of factors, including changes in their businesses and operations, and other factors that are beyond the control of Vulcan and Florida Rock, including changes in their business prospects, regulatory considerations and general and industry specific market and economic conditions. Neither Vulcan nor Florida Rock is permitted to terminate the merger agreement solely because of changes in the market price of either party’s common stock.

After you submit a form of election, you will not be able to sell those shares, unless you revoke your election prior to the election deadline or the merger agreement is terminated.

 

The deadline for making a cash or share election for Florida Rock shares is 5:00 p.m., EDT, on [     ], 2007, the day of the special meeting of Florida Rock shareholders, unless the completion of the Florida Rock merger will occur more than four business days following the date of this special meeting, in which case the election deadline will be extended until two business days before the completion of the Florida Rock merger. After you submit a form of election, under the terms of the election, you will not be able to sell any Florida Rock shares covered by your form of election, regardless of whether those shares are held in certificated or book-entry form, unless you revoke your election before the deadline by providing written notice to the exchange agent. If you do not revoke your election, you will not be able to sell your Florida Rock shares covered by a form of election prior to completion of the Florida Rock merger. In the time between your submission of a form of election and the completion of the Florida Rock merger, the trading price of Florida Rock common stock may change, and you might otherwise want to sell your Florida Rock shares covered by a form of election to gain access to cash, make other investments, or reduce the potential for an adverse change in the value of your investment.

 

We may fail to realize the anticipated benefits of the mergers, which could adversely affect the value of Holdco stock.

 

The mergers involve the integration of two companies that have previously operated independently. Vulcan and Florida Rock expect the combined company to result in financial and operational benefits, including enhanced earnings growth, overhead savings, operating cost savings and other synergies. However, to realize the anticipated benefits from the mergers, we must successfully combine the businesses of Vulcan and Florida Rock in a manner that permits this earnings growth and cost savings. In addition, we must achieve these savings without adversely affecting revenues. If we are not able to successfully achieve these objectives, the anticipated benefits of the mergers may not be realized fully or at all or may take longer to realize than expected.

 

The failure to integrate successfully Vulcan’s and Florida Rock’s businesses and operations in the expected timeframe may adversely affect Holdco’s future results.

 

Vulcan and Florida Rock have operated and, until the completion of the mergers, will continue to operate, independently. Vulcan and Florida Rock will face significant challenges in consolidating functions, integrating their organizations, procedures and operations in a timely and efficient manner and retaining key Vulcan and Florida Rock personnel. The integration of Vulcan and Florida Rock will be costly, complex and time consuming.

 

The integration process and other disruptions from the transaction could be more costly than we expect or result in the loss of key employees, the disruption of each company’s ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect our ability to maintain relationships with customers, suppliers, employees and others with whom we have business dealings or to achieve the anticipated benefits of the mergers.

 

Integrating Vulcan and Florida Rock may divert management’s attention away from our operations.

 

Successful integration of Vulcan’s and Florida Rock’s organizations, procedures and operations may place a significant burden on the managements of Vulcan and Florida Rock and their internal resources. The integration efforts could divert management’s focus and resources from other strategic opportunities and from operational matters during the integration process.

 

Officers and directors of Florida Rock have certain interests in the Florida Rock merger that are different from, or in addition to, interests of Florida Rock shareholders. These interests may be perceived to have affected their decision to support or approve the Florida Rock merger.

 

Florida Rock officers and directors have certain interests in the Florida Rock merger that are different from, or in addition to, interests of Florida Rock shareholders. These interests include, but are not limited to, the treatment of stock options held by directors and executive officers of Florida Rock in the Florida Rock merger (including the acceleration of stock options), the vesting and accelerated payment of certain retirement benefits and the potential

payment of certain severance benefits to executive officers, the continued employment after the mergers of Thompson S. Baker II as President of the Florida Rock division of Holdco, John D. Baker II’s service as a director of Holdco after the mergers, the possible purchase by Edward L. Baker and John D. Baker II from Florida Rock of a 6,300 acre property immediately prior to the mergers, the support agreement between Vulcan and the Baker Shareholders, the shareholders agreement among Vulcan, Holdco and the Baker Shareholders, and the indemnification of former Florida Rock officers and directors by Holdco. Florida Rock shareholders should be aware of these interests when considering the Florida Rock board of directors’ recommendation to approve the merger agreement. Please see “The Mergers — Interests of Certain Persons in the Florida Rock Merger.”

 

The costs of the merger could adversely affect Holdco’s operating results.

 

Vulcan and Florida Rock estimate the total merger-related costs, exclusive of employee benefit costs, to be approximately $[     ], primarily consisting of investment banking, legal and accounting fees and financial printing and other related charges. The foregoing estimate is preliminary and subject to change. In addition, the combined company will incur certain expenses in connection with the integration of Vulcan’s and Florida Rock’s businesses. Although Vulcan and Florida Rock expect that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses, may offset incremental transaction and transaction-related costs over time, this net benefit may not be achieved in the near term, or at all.

 

Vulcan’s incurrence of additional debt to pay the cash portion of the merger consideration will significantly increase Vulcan’s interest expense, financial leverage and debt service requirements.

 

Vulcan anticipates arranging approximately $4.0 billion of new credit facilities in connection with the mergers, and expects to borrow approximately $3.3 billion under such credit facilities in order to acquire 70% of the outstanding shares of Florida Rock common stock, cash settle Florida Rock stock options outstanding immediately prior to the effective time of the mergers and finance Vulcan’s transaction costs. Incurrence of this new debt will significantly increase the combined company’s leverage. While management believes Holdco’s cash flows will be more than adequate to service this debt, there may be circumstances in which required payments of principal and/or interest on this new debt could adversely affect Holdco’s cash flows and operating results, and therefore the market price of Holdco stock.

 

Florida Rock and Vulcan may not be able to obtain the regulatory approvals required to consummate the mergers unless they agree to material restrictions or conditions.

 

Completion of the mergers is conditioned upon the receipt of all required governmental consents and authorizations, including under the HSR Act. Vulcan and Florida Rock intend to pursue all of these consents and authorizations as required by and in accordance with the terms of the merger agreement. Complying with requests from governmental agencies, including requests for additional information and documents, could delay consummation of the mergers. In connection with granting these consents and authorizations, governmental authorities may require divestitures of Vulcan or Florida Rock assets or seek to impose conditions on Holdco’s operations after completion of the mergers. Such divestitures or conditions may jeopardize or delay completion of the mergers or may reduce the anticipated benefits of the mergers. Please see “The Mergers — Regulatory Matters,” “The Merger Agreement — Conditions to Completion of the Mergers” and “The Merger Agreement — Additional Agreements.”

 

The merger agreement contains provisions that could affect the decisions of a third party considering making an alternative acquisition proposal to the Florida Rock merger.

 

Under the terms of the merger agreement, Florida Rock will be required to pay to Vulcan a termination fee of $135 million if the merger agreement is terminated under certain circumstances. In addition, the merger agreement limits the ability of Florida Rock to initiate, solicit, encourage or facilitate certain acquisition or merger proposals from a third party. These provisions could affect the decision by a third party to make a competing acquisition proposal, including the structure, pricing and terms proposed by a third party seeking to acquire or merge with Florida Rock. Please see “The Merger Agreement — Termination Fees” and “The Merger Agreement — No Solicitation of Alternative Transactions.”

 

Former Florida Rock shareholders who become shareholders of Holdco will be governed by the restated certificate of incorporation and restated by-laws of Holdco.

 

Florida Rock shareholders who receive Holdco common stock in the Florida Rock merger will become Holdco shareholders and their rights as shareholders will be governed by the restated certificate of incorporation and restated by-laws of Holdco and New Jersey corporate law. As a result, there will be material differences between the current rights of Florida Rock shareholders and the rights they can expect to have as Holdco shareholders. Please see “Comparison of Shareholder Rights.”

 

A purported shareholder class action complaint has been filed against Florida Rock and the members of its board of directors challenging the mergers and an unfavorable judgment or ruling in this lawsuit could prevent or delay the consummation of the mergers and result in substantial costs.

 

Florida Rock and the members of its board of directors were named in a purported shareholder class action complaint filed in Florida state court (the Duval County Circuit Court) on March 6, 2007, captioned Dillinger v. Florida Rock, et al., Case No. 16-20007-CA-001906. The complaint seeks to enjoin the mergers, and alleges, among other things, that the directors have breached their fiduciary duties owed to Florida Rock shareholders by attempting to sell Florida Rock to Vulcan for an inadequate price.

 

Florida Rock is obliged under certain circumstances to indemnify and hold harmless each director and officer from and against any and all claims and liabilities to which such director or officer shall have become subject by reason of being a director or officer, to the full extent permitted under Florida law. An adverse outcome in this lawsuit could prevent or delay the consummation of the mergers and result in substantial costs to Florida Rock and/or Vulcan. It is also possible that other similar lawsuits may be filed in the future. Florida Rock cannot reasonably estimate any possible loss from current or future litigation at this time.

 

This proxy statement/prospectus contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be made directly in this proxy statement/prospectus or they may be made a part of this proxy statement/prospectus by appearing in other documents filed with the SEC by Florida Rock and Holdco and incorporated by reference in this proxy statement/prospectus. These statements may include statements regarding the period following completion of the mergers.

 

Words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “objective,” “goal,” “should” and words and terms of similar substance used in connection with any discussion of future operating or financial performance of Vulcan, Florida Rock, Holdco or the mergers identify forward-looking statements. All forward-looking statements are management’s present expectations or forecasts of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the factors relating to the mergers discussed under the caption “Risk Factors” beginning on page 14 above, the following risks related to the businesses of Vulcan, Florida Rock and Holdco, among others, could cause actual results to differ materially from those described in the forward-looking statements:

 

 

We caution you not to place undue reliance on the forward-looking statements, which speak only as of the date of this proxy statement/prospectus in the case of forward-looking statements contained in this proxy statement/prospectus, or the dates of the documents incorporated by reference in this proxy statement/prospectus in the case of forward-looking statements made in those incorporated documents. Except as may be required by law, none of Vulcan, Florida Rock or Holdco has any obligation to update or alter these forward-looking statements, whether as a result of new information, future events or otherwise.

 

For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the annual reports on Form 10-K and the quarterly reports on Form 10-Q that Florida Rock has filed with the SEC as described under “Where You Can Find More Information” on page 104 and the annual report on Form 10-K and quarterly report on Form 10-Q of Vulcan attached hereto as Annexes G and I, respectively.

 

We expressly qualify in their entirety all forward-looking statements attributable to Vulcan, Florida Rock or Holdco or any person acting on our behalf by the cautionary statements contained or referred to in this section.

 

This proxy statement/prospectus is being furnished to you in connection with the solicitation of proxies by Florida Rock’s board of directors in connection with the special meeting of shareholders.

 

This proxy statement/prospectus is first being furnished to Florida Rock shareholders on or about [          , 2007].

 

The special meeting will be held at 9:00 a.m., local time, on [          ,          , 2007], at [          ], Jacksonville, Florida [          ].

 

At the special meeting, Florida Rock’s shareholders will be asked to consider and vote upon a proposal to approve the merger agreement, a proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to approve the merger agreement, and to transact such other business as may properly come before the special meeting or any adjournment or postponement of such meeting.

 

The board of directors of Florida Rock has fixed the close of business on [          , 2007] as the record date for determination of shareholders entitled to notice of and to vote at the special meeting of shareholders.

 

On the record date, there were [          ] shares of Florida Rock common stock outstanding and entitled to vote at the special meeting, held by approximately [          ] holders of record. Shares that are held in Florida Rock’s treasury are not entitled to vote at the special meeting.

 

A majority of the outstanding shares of Florida Rock common stock must be represented, either in person or by proxy, to constitute a quorum at the special meeting. The affirmative vote of holders of a majority of the shares of Florida Rock common stock outstanding on the record date is required to approve the merger agreement. The affirmative vote of a majority of the votes cast at the special meeting is required to approve the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies if there are insufficient votes at the time of the meeting to approve the merger agreement. At the special meeting, each holder of Florida Rock common stock is entitled to one vote for each share of Florida Rock common stock held as of the Florida Rock record date on all matters properly submitted to the Florida Rock shareholders.

 

As of the record date, Florida Rock directors and executive officers and their affiliates (other than Edward L. Baker, John D. Baker II and Baker Holdings, L.P.), owned and were entitled to vote approximately [          ] shares of Florida Rock common stock, representing approximately [     %] of the outstanding shares of Florida Rock common stock.

 

Pursuant to a support agreement, the Baker Shareholders have agreed to vote shares of Florida Rock common stock representing approximately 9.9% of the outstanding shares of Florida Rock common stock in favor of approving the merger agreement. Further information concerning the support agreement can be found under “The Mergers — The Support Agreement” on page 71.

 

All shares of Florida Rock common stock represented by properly executed proxies or voting instructions (including those voting instructions given through electronic voting through the Internet or by telephone) received before or at the Florida Rock special meeting prior to the closing of the polls will, unless revoked, be voted in

accordance with the instructions indicated on those proxies or voting instructions. If no instructions are indicated on a properly executed proxy card, the shares will be voted FOR approval of the merger agreement and FOR the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies. If you return a properly executed proxy card or voting instruction card and have indicated that you have abstained from voting, your Florida Rock common stock represented by the proxy will be considered present at the applicable special meeting for purposes of determining a quorum, but will have the same effect as a vote against approving the merger agreement. We urge you to mark each applicable box on the proxy card or voting instruction card to indicate how to vote your shares.

 

If your shares are held in an account at a broker, bank or other nominee, or through the Florida Rock Employee Stock Purchase Plan, the Florida Rock Industries, Inc. Profit Sharing and Deferred Earnings Plan or The Arundel Corporation Profit Sharing and Savings Plan, which we refer to collectively as the “Florida Rock Plans,” you must instruct the broker, bank or plan administrator on how to vote your shares. If an executed proxy card returned by a broker, bank or plan administrator holding shares indicates that the broker, bank or plan administrator does not have discretionary authority to vote on a particular matter, the shares will be considered present at the meeting for purposes of determining the presence of a quorum, but will have the same effect as a vote against approving the merger agreement. This is called a broker non-vote. Your broker, bank or plan administrator will vote your shares over which it does not have discretionary authority only if you provide instructions on how to vote by following the instructions provided to you by your broker, bank or plan administrator. If you hold shares through any Florida Rock Plan, your shares in the plan may be voted even if you do not instruct the trustee how to vote, as explained in your voting instructions.

 

Because the approval of the merger agreement requires the affirmative vote of a majority of the outstanding shares of Florida Rock common stock, abstentions, failures to vote and broker non-votes will have the same effect as votes against approving the merger agreement. Abstentions, failures to vote and broker non-votes will have no effect with respect to the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies.

 

Florida Rock does not expect that any matter other than the proposal to approve the merger agreement and the proposal to adjourn the special meeting, if necessary or appropriate, to solicit additional proxies will be presented at the special meeting. If, however, other matters are properly presented, the persons named as proxies will vote in accordance with their judgment with respect to those matters, unless you withhold authority to do so on the proxy card or voting instruction card.

 

You may revoke your proxy at any time before it is voted at the special meeting. If you are a holder of record you may do so by:

 

 

 

 

For shares held beneficially by you, you may change your vote only by submitting new voting instructions to your broker or nominee. If you submit your voting instruction through the Internet or by telephone, you can change your vote by submitting a voting instruction at a later date, in which case your later-submitted voting instruction will be recorded and your earlier voting instruction will be revoked. If the special meeting is postponed or adjourned, it will not affect the ability of shareholders of record as of the record date to exercise their voting rights or to revoke any previously granted proxy using the methods described above.

 

Many shareholders who hold their shares through a broker, bank or other nominee will have the option to submit their voting instructions electronically through the Internet or by telephone. If you hold your shares through

a broker, bank or other holder of record, you should check your proxy card or voting instruction card forwarded by your broker, bank or other holder of record to see which options are available.

 

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and annual reports with respect to two or more shareholders sharing the same address by delivering a single proxy statement/prospectus and annual report addressed to those shareholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for shareholders and cost savings for companies.

 

A single proxy statement/prospectus will be delivered to multiple shareholders sharing an address unless contrary instructions have been received from the affected shareholders. Once you have received notice from your broker that it will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement/prospectus, please notify your broker, direct your written request to Florida Rock Industries, Inc., Investor Relations, 155 East 21st Street, Jacksonville, Florida 32206 or contact investor relations at 904-355-1781. Shareholders who currently receive multiple copies of the proxy statement/prospectus at their address and would like to request “householding” of their communications should contact their broker.

 

Florida Rock will bear the expenses incurred in connection with the printing and mailing of this proxy statement/prospectus. To assist in the solicitation of proxies, Florida Rock has retained D.F. King & Co., Inc. for a fee of $15,000 plus reimbursement of expenses to assist in the solicitation of proxies. Florida Rock and its proxy solicitors will also request banks, brokers and other intermediaries holding shares of Florida Rock common stock beneficially owned by others to send this proxy statement/prospectus to, and obtain proxies from, the beneficial owners and will, if requested, reimburse the record holders for their reasonable out-of-pocket expenses in so doing. Solicitation of proxies by mail may be supplemented by telephone and other electronic means, advertisements and personal solicitation by the directors, officers or employees of Florida Rock. No additional compensation will be paid to our directors, officers or employees for solicitation.

 

Participants in the Florida Rock Industries, Inc. Profit Sharing and Deferred Earnings Plan and The Arundel Corporation Profit Sharing and Savings Plan, which we collectively refer to as the “Florida Rock Plans,” will be able to direct how they want Florida Rock shares allocated to their accounts as of the record date to be voted and whether they want to elect cash consideration or share consideration to be allocated to their accounts in exchange for each Florida Rock share in their accounts as of the closing date. All voting instructions submitted by Florida Rock Plan participants are confidential and will not be disclosed to Florida Rock management.

 

After the voting instructions with respect to the Florida Rock Plans are tabulated, the results will be given to the plan trustee. Your instructions on how to vote on the approval of the merger agreement and to elect the merger consideration will be subject, in the case of all Florida Rock Plans, to the plan trustee’s fiduciary duties under ERISA. If you are a participant in the Florida Rock Plans, please follow the instructions that you receive for voting and elections with respect to the shares allocated to your account.

 

As of the Florida Rock record date, the Florida Rock Plans held approximately [     %] of the then outstanding shares of Florida Rock common stock.

 

Participants in the Florida Rock Plans will be able to direct their shares to be voted at the special meeting in one of three ways: vote for approval of the merger agreement, vote against approval of the merger agreement or abstain

from voting on approval of the merger agreement. Please note that the plan trustee will take the following steps with respect to shares in a Florida Rock Plan account, subject to its fiduciary duties under ERISA:

 

 

You will be separately provided with an opportunity to elect whether, if the Florida Rock merger is completed, you wish to request either $67.00 in cash, without interest, or 0.63 of a share of Holdco common stock as consideration for each Florida Rock share allocated to your account, subject to the proration procedures described in this proxy statement/prospectus and applicable to all Florida Rock shareholders.

 

You will be provided with separate instructions on how to make such an election. The procedure outlined in the instructions will be the only opportunity you will have to choose the form of consideration to be requested in exchange for your plan shares. Accordingly, please note that, if participants in a Florida Rock Plan do not properly provide instructions as to the type of consideration they request for their plan shares, cash and stock will be elected for their plan shares ratably in the same proportion as for those plan shares for which properly completed elections were received.

 

This section of the proxy statement/prospectus describes material aspects of the proposed mergers, including the merger agreement. This summary may not contain all of the information that is important to you. You should carefully read this entire proxy statement/prospectus, including the full text of the merger agreement, which is attached as Annex A, and the other documents we refer you to for a more complete understanding of the mergers. In addition, important business and financial information about Vulcan is included in the Annexes hereto and important business and financial information about Florida Rock is incorporated into this proxy statement/prospectus by reference. See “Where You Can Find More Information.”

 

Upon completion of the Vulcan merger, Fresno Merger Sub, a wholly owned subsidiary of Holdco newly organized to effect the Florida Rock merger, will merge with and into Florida Rock. Florida Rock will be the surviving corporation in the Florida Rock merger and will become a wholly owned subsidiary of Holdco.

 

In the Florida Rock merger, each outstanding share of Florida Rock common stock (other than shares owned by Florida Rock, Fresno Merger Sub, Vulcan or any wholly owned subsidiary of Vulcan or Florida Rock) will be converted into the right to receive, at the holder’s election, $67.00 in cash per share, without interest, or 0.63 of a share of Holdco common stock per share, subject to proration. Florida Rock shareholder elections will be subject to proration to ensure that 30% of Florida Rock shares will be exchanged for Holdco shares and 70% of Florida Rock shares will be exchanged for cash. The exchange ratio and the per share amount of cash to be paid are fixed and will not be adjusted to reflect stock price changes prior to the date of the Florida Rock merger. Each share of Florida Rock common stock owned by Florida Rock or Fresno Merger Sub will be cancelled without consideration. Each share of Florida Rock common stock owned by Vulcan or any direct or indirect wholly owned subsidiary of Florida Rock or Vulcan (other than Fresno Merger Sub) will be converted into the right to receive 0.63 of a share of Holdco common stock. The conversion of these shares is not subject to proration, and these shares will not be taken into consideration when determining the proration calculations.

 

In the Florida Rock merger, all outstanding company-issued Florida Rock stock options will vest and become exercisable at least 10 business days prior to the election deadline. Option holders who exercise their options and receive shares of Florida Rock common stock prior to the fourth business day prior to the election deadline may make elections with respect to such shares. Each Florida Rock stock option that remains outstanding immediately prior to the effective time of the Florida Rock merger will be exchanged for the right to receive cash in an amount equal to the number of shares of Florida Rock common stock subject to such option multiplied by the excess, if any, of $67.00 over the exercise price for such stock option. See “Treatment of Stock Options and Other Equity-Based Awards” on page 60.

 

The rights pertaining to Holdco common stock will be different from the rights pertaining to Florida Rock common stock, because the restated certificate of incorporation and restated by-laws of Holdco in effect immediately after the mergers are completed will be different from the restated articles of incorporation and restated bylaws of Florida Rock and because Holdco is a New Jersey and not a Florida corporation. A further description of the rights pertaining to Holdco common stock and Holdco’s restated certificate of incorporation and restated by-laws which will be in effect immediately after the mergers are completed is further described under “Description of Holdco Capital Stock — Common Stock” on page 86 and “Comparison of Shareholders Rights” on page 87.

 

Virginia Merger Sub, a wholly owned subsidiary of Holdco newly organized to effect the Vulcan merger, will merge with and into Vulcan. Vulcan will be the surviving corporation in the Vulcan merger and will become a wholly owned subsidiary of Holdco.

 

In the Vulcan merger, each outstanding share of Vulcan common stock (other than shares owned by Vulcan) will be converted into one share of Holdco common stock. The exchange ratio is fixed and will not be adjusted to reflect stock price changes prior to the date of the Vulcan merger. Each share of Vulcan common stock owned by

Vulcan will be cancelled without consideration. Each share of Vulcan common stock owned by Florida Rock or any direct or indirect wholly owned subsidiary of Florida Rock or Vulcan will be converted into the right to receive one share of Holdco common stock.

 

All outstanding Vulcan stock options and stock appreciation rights under employee benefit plans will be converted into options to purchase an equivalent number of shares of Holdco common stock, subject to the same terms and conditions. All restricted stock units, deferred stock units, or phantom units of Vulcan will be converted into a number of restricted stock units, deferred stock units or phantom units in respect of shares of Holdco common stock, equal to the number of shares underlying the applicable restricted stock units, deferred stock units or phantom units immediately prior to the effective time of the Vulcan merger.

 

The rights pertaining to Holdco common stock will be the same in all material respects to the rights pertaining to Vulcan common stock, because the restated certificate of incorporation and restated by-laws of Holdco in effect immediately after the completion of the mergers will be substantially similar to the current restated certificate of incorporation and restated by-laws of Vulcan. A further description of the rights pertaining to Holdco common stock and Holdco’s restated certificate of incorporation and restated by-laws is further described under “Description of Holdco Capital Stock — Common Stock” on page 86 and “Comparison of Shareholder Rights” on page 87.

 

For a number of years, the Florida Rock board of directors and senior management have periodically reviewed Florida Rock’s strategic position in the heavy building materials industry and the impact of industry changes and developments on Florida Rock. To enhance Florida Rock’s strategic position, the Florida Rock board of directors and senior management have pursued a number of strategic initiatives in recent years, including the Lafarge Florida acquisition, the expansion of the Newberry cement plant, acquisitions of additional reserves on the Ohio and Tennessee rivers and other strategic acquisitions. The Florida Rock board of directors and senior management have explored various potential alternatives, including acquisitions and possible business combinations, to improve Florida Rock’s strategic position and to increase shareholder value.

 

Vulcan and Florida Rock operate in the same industry and consequently representatives of each company have commercial interactions with representatives of the other from time to time. The companies also conduct business with each other. In particular, Florida Rock purchases aggregates from Vulcan at several facilities and the companies negotiate from time to time regarding other commercial arrangements that may be beneficial to both companies. Donald M. James, Vulcan’s chairman and chief executive officer and a member of Vulcan’s board of directors, and John D. Baker II, Florida Rock’s president and chief executive officer and a member of Florida Rock’s board of directors, have both participated for many years in the National Stone, Sand & Gravel Association, an industry trade group, and both serve on the board of directors of Wachovia Corporation.

 

From time to time over the past several years, representatives of Florida Rock and Vulcan have informally discussed a number of potential transactions between the two companies, including the possible acquisition of Florida Rock by Vulcan. These discussions were general in nature and did not advance to detailed consideration of any specific transaction because the parties were not able to agree on a value range for the acquisition of Florida Rock. Over the past several years, representatives of Florida Rock have also had informal discussions with two other industry participants with respect to possible business combination transactions. These informal discussions focused on business combination transactions which offered no premium for Florida Rock common stock, and were abandoned at preliminary stages because the parties could not agree on valuations.

 

In late October 2006, at a meeting of Vulcan’s board of directors, the Vulcan board authorized Mr. James to explore a number of potential transactions, including a transaction with Florida Rock. Goldman Sachs & Co., financial advisor to Vulcan, provided analyses to Vulcan’s management in late October 2006 regarding three hypothetical business combinations, including an acquisition of Florida Rock. The analyses included a presentation of pro forma post-combination financial results, including revenue and earnings, and factual data about the companies drawn from public filings. Goldman Sachs did not provide any financial advisory services to Florida Rock in connection with the mergers and has never received, and will not receive a fee for providing any such services to Florida Rock.

 

In early December 2006, Mr. James called Mr. John Baker to express an interest in discussing with Florida Rock a potential transaction whereby Vulcan would acquire Florida Rock. During this and subsequent telephonic discussions and meetings in December 2006 among Mr. James, Mr. John Baker and, in some instances, Edward L. (Ted) Baker, Mr. John Baker’s brother and Florida Rock’s chairman, the parties discussed Vulcan’s interest in a potential transaction with Florida Rock and a number of possible transaction structures. These discussions included a general exchange of views on the forms of consideration payable in a potential transaction, which focused on the percentage of cash and stock consideration that would be paid to Florida Rock shareholders in a potential transaction and the tax consequences of a potential transaction. The parties also discussed the possibility that Vulcan might need to simultaneously acquire Patriot Transportation Holding, Inc., which we refer to in this proxy statement/prospectus as Patriot, as a means for Vulcan to acquire reserves owned by Patriot and leased to Florida Rock. Messrs. John Baker and Ted Baker and Baker Holdings, L.P., beneficially own, in the aggregate, approximately 44.8% of the outstanding shares of Patriot common stock. In addition, Messrs. John Baker and Ted Baker, Thompson S. Baker II, Mr. Ted Baker’s son and a director and vice president of Florida Rock, and Luke E. Fichthorn III, a director of Florida Rock, are on the board of directors of Patriot.

 

Also in early December 2006, Mr. John Baker called Mr. James to indicate his belief, based upon his knowledge of both Florida Rock, including its prospects and strategic alternatives, and the heavy building materials industry generally, that the Florida Rock board of directors might consider pursuing a transaction in which Vulcan would simultaneously acquire Florida Rock and Patriot for aggregate consideration to shareholders of Florida Rock and Patriot having a value equivalent to approximately $71.00 times the number of outstanding shares of Florida Rock common stock. Mr. James responded that Vulcan would need to perform due diligence in order to determine whether Vulcan could support such a valuation, including a detailed review of Florida Rock’s real estate portfolio and aggregates reserves.

 

In a subsequent telephone conversation with Mr. John Baker, Mr. James indicated that, subject to satisfactory completion of its due diligence, Vulcan might consider acquiring Florida Rock on a stand-alone basis for equivalent value in the low $60 range per share of Florida Rock common stock. Mr. John Baker indicated to Mr. James his belief, based upon the factors discussed above, that a valuation in the low $60 range per share would not likely be acceptable to the Florida Rock board of directors.

 

On December 8, 2006, at a regularly scheduled meeting of the Vulcan board of directors, Mr. James provided an update on the discussions with Messrs. John and Ted Baker. The Vulcan board of directors authorized Mr. James to continue to engage in discussions with respect to a potential transaction.

 

On December 12, 2006, Florida Rock and Vulcan entered into a non-disclosure agreement to facilitate the exchange of due diligence materials.

 

On December 14, 2006, Mr. James met with Messrs. John and Ted Baker in Jacksonville to continue the discussion of a potential transaction. The discussion focused on the valuation of Florida Rock’s real estate portfolio and the amount of aggregates reserves.

 

At the time of and subsequent to these discussions, Vulcan continued its legal due diligence of Florida Rock and Patriot and worked to determine an appropriate valuation for the potential transaction, including an appropriate valuation for an acquisition of both Florida Rock and Patriot and an acquisition of Florida Rock on a stand-alone basis.

 

On January 8, 2007, Mr. John Baker, Mr. Thompson Baker and John Milton, Florida Rock’s executive vice president and chief financial officer, met with Mr. James, Daniel F. Sansone, Vulcan’s senior vice president and chief financial officer, G. M. (Mac) Badgett III, Vulcan’s senior vice president, Construction Materials Group, Robert A.Wason IV, Vulcan’s senior vice president, corporate development and William F. Denson III, Vulcan’s senior vice president and general counsel in Jacksonville, Florida to discuss the potential transaction. The Florida Rock representatives reviewed the terms of the Florida Rock/Patriot leases with the Vulcan representatives and explained that they generally permit Florida Rock to mine the leased reserves for the life of such reserves. Based upon this understanding, the Vulcan representatives indicated that pursuing the simultaneous acquisition of Patriot was not necessary and that Vulcan was no longer interested in considering the acquisition of Patriot. The parties also reviewed the status of Florida Rock’s Lake Belt litigation. Due to uncertainty as to the remedies that might be

ordered by the court in the Lake Belt litigation, the likely impact of the Lake Belt litigation on Florida Rock could not be quantified with any accuracy, and consequently the parties focused their discussion on Florida Rock’s plans for mitigating the impact of any potential adverse rulings in that litigation. At the meeting, Mr. John Baker indicated his belief, based upon the same factors discussed above in connection with previous pricing discussions between the parties, that the Florida Rock board of directors might be willing to consider an offer valuing Florida Rock common stock at $67.00 per share (excluding Patriot). Mr. James did not make a counterproposal, but expressed to Mr. John Baker his preliminary view that a valuation of $66.00 per share of Florida Rock common stock (excluding Patriot) would be consistent with previous pricing discussions regarding an acquisition of both Florida Rock and Patriot.

 

On January 11, 2007, Mr. John Baker called members of the Florida Rock board of directors to inform them of the discussions that had occurred with Vulcan with respect to a potential transaction. Based upon these conversations, it was the consensus of the Florida Rock board of directors that discussions with Vulcan regarding the potential transaction should continue.

 

In early January 2007, at the request of Messrs. John and Ted Baker, Weil, Gotshal & Manges, LLP, legal counsel to Florida Rock, contacted several financial advisory firms, including Lazard Frères & Co., on a confidential basis, without naming Florida Rock or its industry, to determine each firm’s availability to accept an engagement on behalf of Florida Rock, as well as the fees such firms would charge for their advisory services. Based on the results of these initial contacts, the views of Florida Rock’s directors and subsequent discussions between Lazard and Florida Rock’s management, Lazard was retained by Florida Rock, pursuant to an engagement letter dated January 25, 2007, to act as its financial advisor in connection with the potential transaction, to assist in negotiating the financial terms of the potential transaction, and, if necessary, to opine on the fairness of the consideration to be received by the shareholders of Florida Rock in the potential transaction.

 

On January 18, 2007, Mr. John Baker, Mr. Ted Baker, Mr. Milton and representatives of Weil, Gotshal & Manges and Lazard met in New York City with Mr. James, Mr. Sansone, Mr. Denson and Mr. Wason and representatives of Wachtell, Lipton, Rosen & Katz, legal counsel to Vulcan, and Goldman Sachs to discuss the potential transaction. The parties discussed the due diligence process, the structure of the potential transaction, the form of consideration to be paid by Vulcan (which would include the ability of Florida Rock shareholders to choose between cash and stock, subject to limitations) and Vulcan’s desire that certain members of the Baker family execute a support agreement and shareholders agreement in connection with the transaction. The parties also reviewed analyses of a number of properties owned by Florida Rock. These analyses, which were principally compiled by Florida Rock management, estimated the value of the properties based on future development that could occur after the properties are no longer mined for aggregates or otherwise used in business operations.

 

On January 19, 2007, Messrs. John Baker, Thompson Baker and Milton met with Messrs. James, Denson, Badgett and Wason in Jacksonville, Florida to further discuss the analyses of Florida Rock’s real estate holdings and aggregates reserves, including the length of life and quality of the reserves, and potential new aggregates projects. The parties also discussed Florida Rock’s business generally and the potential synergies that could result from the proposed transaction. After discussion, the parties reached a consensus that $50 million of annual pre-tax synergies was a reasonable estimate of what could be achieved as a result of the proposed transaction.

 

In late January 2007, Vulcan and Florida Rock continued exchanging due diligence materials, including leases of real property, material agreements, financing documents, acquisition and disposition agreements, employment and employee benefits documents, tax documentation and litigation documentation. The exchange of due diligence materials continued until the execution of the merger agreement.

 

On January 25, 2007, the Florida Rock board of directors held a special meeting with representatives of Weil, Gotshal & Manges and Lazard in attendance to discuss the potential transaction. At this meeting, Mr. John Baker and Mr. Milton, representing Florida Rock’s senior management, provided the Florida Rock board of directors with an overview of Florida Rock’s discussions with Vulcan relating to the potential transaction. In addition, representatives of Weil, Gotshal & Manges advised the Florida Rock board of directors of its fiduciary duties in connection with such a transaction and summarized the general terms proposed by Vulcan with respect to the transaction, including structure, timing, antitrust review and required shareholder vote. Also at the meeting, representatives of Lazard gave a financial presentation regarding Florida Rock and the heavy building materials sector generally, as well as a preliminary valuation analysis of Florida Rock and the Florida Rock board of directors

asked questions regarding the financial presentation, including the discount rate used by Lazard in the discounted cash flow analysis, the comparable companies and transactions analyzed by Lazard, Lazard’s views of the interest and ability of various industry participants to acquire Florida Rock at the price levels being discussed by the parties and Lazard’s views on industry conditions and outlook. The Florida Rock board of directors also discussed with Florida Rock’s management and representatives of Lazard five-year financial projections. The five-year financial projections, which we refer to in this proxy statement-prospectus as the Florida Rock financial projections, were prepared by Florida Rock’s management at Vulcan’s request solely for purposes of the evaluation of the potential transaction. Vulcan provided to Florida Rock’s management Vulcan’s macroeconomic outlook for the United States economy as well as Vulcan’s estimates of market demand for aggregates and growth by aggregates end use market for each state in which Florida Rock operates. In developing the Florida Rock financial projections, Florida Rock management utilized the foregoing data provided by Vulcan and made certain adjustments to Vulcan’s outlook for near-term periods. The material Florida Rock financial projections can be found under “Certain Florida Rock Financial Projections” beginning on page 42.

 

The Florida Rock board of directors then discussed with Florida Rock’s senior management and representatives of Weil, Gotshal & Manges and Lazard, potential strategic alternatives available to Florida Rock, including the benefits, opportunities, risks and uncertainties associated with Florida Rock remaining an independent company, as well as the merits of a possible business combination transaction. The Florida Rock board of directors discussed whether it was an opportune time to enter into the potential transaction in light of the current downturn in the housing market in the Southeast generally and Florida in particular and inquired of Lazard how potential acquirors might value Florida Rock. During the course of this discussion, the Florida Rock board of directors considered the factors that they believed would affect an acquiror’s determination of the purchase price that it might be willing to pay for Florida Rock, and concluded that there were other factors, such as the net present value of Florida Rock’s mining reserves and the pricing cycle of Florida Rock’s products, that would be important to such a determination. The discussion also included an analysis of the benefits and risks related to approaching other industry participants regarding a potential transaction prior to entering into a merger agreement with Vulcan and, in particular, an assessment of the risks to Florida Rock’s business and the potential transaction associated with conducting a “market check” prior to entering into a merger agreement with Vulcan. In particular, the Florida Rock board of directors was concerned about the negative effect a premature public announcement of a potential transaction would have on Florida Rock’s customers, suppliers, operations and key employees. Based upon its analysis of the merits of a possible business combination transaction, including the timing issues discussed above, the substantial premium and pricing multiple that Vulcan was offering, the continued uncertainty over when the housing market might improve, the risks to the business of Florida Rock associated with approaching other industry participants regarding a potential transaction, the resources and ability of certain of the larger industry participants to make an offer for Florida Rock after a transaction was announced if they had an interest in doing so, and the Florida Rock board of directors’ favorable outlook regarding Vulcan’s future performance, including the Florida Rock board of directors’ belief that Vulcan’s product mix and business prospects were superior to other industry participants, the Florida Rock board of directors concluded that it was unlikely that a transaction as favorable as the one being discussed with Vulcan could be achieved in the foreseeable future. Therefore, the independent members of the Florida Rock board of directors directed that Florida Rock management should continue to engage in discussions with Vulcan management with respect to the potential transaction and that neither management of Florida Rock nor Lazard should solicit third-party indications of interest to acquire Florida Rock.

 

Following these discussions, the independent members of the Florida Rock board of directors met in executive session, together with representatives of Weil Gotshal & Manges, and discussed potential conflicts of interest that might arise in connection with the potential transaction. See “— Interests of Florida Rock Directors and Executive Officers” beginning on page 46 for a discussion of these potential conflicts of interest. After this discussion, the independent members of the Florida Rock board of directors concluded that it was not necessary to form a special committee of the Florida Rock board of directors to negotiate the potential transaction or to condition the merger on a vote of a majority of the public shareholders because there were no significant conflicts of interest. In particular, the independent members of the Florida Rock board of directors noted that members of the Baker family were not receiving disparate consideration for their Florida Rock shares, the Baker family’s interests generally were aligned with those of the public shareholders because of their substantial holdings of Florida Rock stock and the possibility of a simultaneous acquisition of Patriot was no longer being considered. The independent members of the Florida

Rock board of directors also determined that they would meet in executive session at the end of each meeting of the Florida Rock board of directors to discuss the proposed transaction. Additionally, the independent members of the Florida Rock board of directors believed that Messrs. John and Ted Baker were best suited to conduct negotiations on behalf of Florida Rock, because of their extensive knowledge and experience with respect to both Florida Rock and the industry generally.

 

On January 30, 2007, Mr. John Baker, Mr. Milton and representatives of Weil, Gotshal & Manges and Lazard met with Messrs. Sansone, Wason, Badgett, Denson, Ejaz A. Khan, Vulcan’s vice president, controller and chief information officer and representatives of Goldman Sachs in Birmingham, Alabama to discuss the five-year financial projections prepared by Florida Rock management, which had previously been provided to Vulcan.

 

On February 6, 2007, Mr. John Baker, Mr. Ted Baker and Mr. Milton met with Messrs. James, Sansone and Wason in Birmingham, Alabama to discuss the terms of the potential transaction, including the consideration payable to Florida Rock shareholders. At the meeting, Mr. James provided to Mr. John Baker, Mr. Ted Baker and Mr. Milton Vulcan’s five-year financial projections, and a summary of terms of the potential transaction, which contemplated Vulcan paying merger consideration per share of Florida Rock common stock of, at the election of Florida Rock shareholders, either $67.00 or a fraction of a share of Holdco common stock, which exchange ratio would be calculated based on the closing price of Vulcan’s common stock immediately preceding the announcement of the transaction. The summary of terms provided that the election by Florida Rock shareholders of either cash or stock consideration would be subject to the requirement that 70% of the aggregate consideration be paid in cash and 30% in Holdco common stock. The summary of terms also contemplated a support agreement and shareholders agreement to be entered into with certain members of the Baker family that would require them to vote approximately 9.9% of the outstanding shares of Florida Rock common stock in support of the transaction and provided for certain voting and transfer restrictions on shares held by certain members of the Baker family after the closing of the transaction that would not be applicable to Florida Rock’s public shareholders. Additionally, the summary of terms provided by Vulcan contemplated that Mr. John Baker would serve on the board of directors of Holdco and Mr. Thompson Baker would serve as president of the new Florida Rock division of Holdco following the closing of the transaction. The parties discussed certain of the proposed terms, and the representatives of Florida Rock indicated that they believed the exchange ratio should be calculated based on the then-current trading price of Vulcan common stock, so that Florida Rock shareholders would receive the benefit of any subsequent increase in the trading price of Vulcan common stock over then-current levels. Mr. James indicated that he believed that the Vulcan board of directors would be agreeable to this request, and that the stock portion of the merger consideration would be based on a 0.63 exchange ratio, which was equal to $67.00 divided by the then-current trading price of Vulcan common stock.

 

On February 7, 2007, the board of directors of Florida Rock held a regularly scheduled meeting with representatives of Weil, Gotshal & Manges, McGuireWoods, legal counsel to Florida Rock, and Lazard participating to discuss the terms of the potential transaction proposed by Vulcan. The Florida Rock board of directors received updates from the senior management of Florida Rock and representatives of Weil, Gotshal & Manges and Lazard concerning the status of negotiations and the open issues related to the potential transaction and asked questions of Lazard regarding the exchange ratio proposed by Vulcan, including with respect to the date used in calculating the exchange ratio. The Florida Rock board of directors discussed Vulcan’s stated preference that Florida Rock sell a certain property owned by a subsidiary of Florida Rock consisting of approximately 6,300 acres located in Suwanee and Columbia counties, Florida in order to eliminate a non-operating asset (for a discussion of the sale of this property, please see “— Interests of Certain Persons in the Florida Rock Merger”). Following this discussion, the independent members of the Florida Rock board of directors determined that Florida Rock should continue to engage in discussions with Vulcan with respect to the potential transaction. After further considering the potential for conflicts of interest (as further discussed in “— Interests of Florida Rock Directors and Executive Officers” beginning on page 46), the independent members of the Florida Rock board of directors also directed that Florida Rock senior management conclude negotiations with respect to the material provisions of the merger agreement before requirements imposed by Vulcan on the Baker family were negotiated, including the support agreement and shareholders agreement, and that separate counsel should be retained by the Baker family with respect to those agreements.

 

On February 9, 2007, the board of directors of Vulcan held a regularly scheduled meeting. At the meeting, a comprehensive review of the potential transaction with Florida Rock was presented by Vulcan management and representatives of Goldman Sachs.

 

Also on February 9, 2007, Wachtell Lipton Rosen & Katz provided Weil, Gotshal & Manges with a draft merger agreement. The draft merger agreement prepared by Wachtell, Lipton Rosen & Katz proposed that Florida Rock be required to pay a termination fee of $135 million under certain circumstances, that Florida Rock would reimburse Vulcan for Vulcan’s expenses up to $25 million if Florida Rock’s shareholders did not vote to approve the merger agreement, that Florida Rock would convene a special meeting of shareholders to vote upon the approval of the merger agreement even if the Florida Rock board of directors changed its recommendation in favor of the merger agreement and that Vulcan would not be required to complete the proposed transaction if the U.S. antitrust regulators required Florida Rock to divest assets that produced more than a specified volume of aggregates in 2006.

 

On February 11, 2007, Weil, Gotshal & Manges provided Wachtell Lipton Rosen & Katz with a revised draft merger agreement. The draft merger agreement prepared by Weil, Gotshal & Manges limited the circumstances under which Florida Rock would be required to pay the $135 million termination fee to Vulcan, eliminated the concept of expense reimbursement by Florida Rock, proposed that Vulcan would be required to complete the proposed transaction regardless of any divestitures required by the U.S. antitrust regulators and proposed that Vulcan would be required to pay a termination fee, the amount of which was not specified, to Florida Rock if the proposed transaction did not close because it was not approved by U.S. antitrust regulators.

 

At various times through the execution of the merger agreement, Vulcan’s senior management as well as its legal counsel and financial advisors negotiated the draft merger agreement and related documents and agreements with Florida Rock’s senior management and its legal counsel and financial advisors. These negotiations included discussions regarding, and the exchange of drafts of and comments on, these documents.

 

On February 12, 2007, Messrs. Sansone, Wason, Khan and Milton and representatives of Lazard and Goldman Sachs held a teleconference to discuss Vulcan’s five-year financial projections, which had been provided to Florida Rock on February 6, 2007.

 

On February 12, 2007 and February 13, 2007, Wachtell Lipton Rosen & Katz provided to Weil, Gotshal & Manges and the Baker family’s legal counsel draft copies of the support agreement and shareholders agreement, respectively. At various times, following the conclusion of the negotiation of the material provisions of the merger agreement, through the execution of these agreements, the parties negotiated these draft agreements. These negotiations included discussions regarding, and the exchange of drafts of and comments on, these documents.

 

On February 18, 2007, the Vulcan board of directors held a special meeting with representatives of Goldman Sachs and Wachtell, Lipton, Rosen & Katz in attendance, to discuss the terms of the potential transaction. Mr. James updated the Vulcan board of directors on the negotiations with Florida Rock, and on Vulcan’s business and accounting due diligence with respect to Florida Rock. Following presentations from Goldman Sachs and Wachtell, Lipton, Rosen & Katz, and a full discussion, the Vulcan board of directors unanimously determined that the merger agreement and the Vulcan merger were advisable and in the best interests of Vulcan and its shareholders and approved the merger agreement. This determination was confirmed at a brief telephonic meeting of the Vulcan board of directors on February 19, 2007.

 

On February 19, 2007, the board of directors of Florida Rock held a special meeting with representatives of Weil, Gotshal & Manges, McGuireWoods, Lazard and KPMG, Florida Rock’s auditor, in attendance to discuss the terms of the potential transaction. Mr. John Baker updated the Florida Rock board of directors on the negotiations with Vulcan. Representatives of Weil, Gotshal & Manges advised the Florida Rock board of directors of its fiduciary duties in connection with the potential transaction and then discussed the terms of the proposed merger agreement and the terms of the proposed support agreement and shareholders agreement to be entered into by the Baker Shareholders. Members of the Florida Rock board of directors asked questions of Weil, Gotshal & Manges with respect to the definition of “material adverse effect” in the merger agreement, and the circumstances under which the termination fee would be payable by Florida Rock. The Florida Rock board of directors then discussed the benefits and risks associated with conducting a “market check” prior to entering into a merger agreement with Vulcan. Representatives of Weil, Gotshal & Manges, in response to questions of the Florida Rock board of directors,

explained the circumstances under which the Florida Rock board of directors could entertain an alternative acquisition proposal from a third-party after the merger agreement with Vulcan had been executed. Representatives of Weil, Gotshal & Manges further reviewed the deal protection provisions contained in the transaction documents, including the termination fee of $135 million that Florida Rock would be required to pay to Vulcan, which represented approximately 2.9% of the aggregate value of the proposed transaction, the ability of the Florida Rock board of directors in certain circumstances to change its recommendation in favor of the potential transaction and the fact that the support agreement to be entered into by the Baker Shareholders would terminate concurrently with any termination of the merger agreement. Representatives of Weil, Gotshal & Manges then summarized the legal due diligence review that had been conducted with respect to Vulcan and representatives of KPMG summarized the accounting due diligence review that had been conducted with respect to Vulcan. Representatives of Lazard made a financial presentation regarding the proposed transaction, which was substantially similar to the previous presentations Lazard made to the Florida Rock board of directors. Members of the Florida Rock board of directors asked questions of Lazard regarding the financial presentation, including questions regarding Lazard’s discounted cash flow analysis, comparable company analysis and precedent transactions analysis. Lazard then delivered to the Florida Rock board of directors its opinion, subsequently confirmed in writing, that subject to the various assumptions and limitations set forth in its opinion, as of February 19, 2007, the consideration to be paid to Florida Rock shareholders (other than Vulcan and any of its direct or indirect wholly-owned subsidiaries), pursuant to the merger agreement, was fair, from a financial point of view, to those shareholders. Lazard’s opinion was subject to assumptions and limitations, including the assumption that the financial projections of Florida Rock and Vulcan were reasonably prepared on bases reflecting the best currently available estimates and judgments of management of Florida Rock and Vulcan as to the future financial performance and results of operation of Florida Rock and Vulcan. Please see “— Opinion of Florida Rock’s Financial Advisor” beginning on page 34 for a discussion of the opinion delivered by Lazard to the Florida Rock board of directors, including a complete discussion of the assumptions and limitations set forth in the opinion.

 

During the course of these discussions and presentations, the Florida Rock board of directors engaged in a full discussion of the advantages of the transaction, a number of countervailing factors and risks, the terms of the transaction, the terms of the voting and transfer restrictions that would be applicable to, and could negatively impact the value of, the Holdco common stock that certain members of the Baker family would receive in the transaction and the interests of Florida Rock’s directors and executive officers in the transaction. Following such discussions, the Florida Rock board of directors unanimously determined that the merger agreement and the Florida Rock merger were advisable and in the best interests of Florida Rock and its shareholders, adopted the merger agreement and recommended that Florida Rock shareholders approve the merger agreement (with Mr. Ted Baker, Mr. John Baker and Mr. Thompson Baker abstaining due to matters discussed in “— Interests of Florida Rock Directors and Executive Officers” beginning on page 46).

 

In the afternoon of February 19, 2007, Vulcan and Florida Rock executed and delivered the merger agreement and issued a joint press release announcing the transaction. Vulcan and the Baker Shareholders also executed and delivered the support agreement and shareholders agreement.

 

At its meeting on February 19, 2007, as well as the other meetings at which it considered the transaction, the Florida Rock board of directors consulted with Florida Rock management as well as its financial and legal advisors and, at its February 19, 2007 meeting, unanimously determined (with Edward L. Baker, John D. Baker II and Thompson S. Baker II abstaining) to adopt the merger agreement and recommended that Florida Rock shareholders vote to approve the merger agreement. In reaching its conclusion to adopt the merger agreement and to recommend that the shareholders of Florida Rock approve the merger agreement, the Florida Rock board of directors considered the following factors as generally supporting its decision to enter into the merger agreement and related agreements:

 

 

 

 

 

 

 

The Florida Rock board of directors also considered a number of potentially countervailing factors and risks. These countervailing factors and risks included the following:

 

 

 

This discussion of the information and factors considered by the Florida Rock board of directors in making its decision is not intended to be exhaustive but includes all material factors considered by the Florida Rock board of directors. In view of the wide variety of factors and risks considered in connection with its evaluation of the Florida Rock merger and the complexity of these matters, the Florida Rock board of directors did not find it useful, and did not attempt to, quantify, rank or otherwise assign relative weights to these factors and risks. In considering the factors and risks described above, individual members of the Florida Rock board of directors may have given different weight to different factors. The Florida Rock board of directors conducted an overall analysis of the factors described above, including discussions with, and questioning of, Florida Rock’s management and Florida Rock’s legal and financial advisors, and considered the factors overall to be favorable to, and to support, its determination.

 

The Florida Rock board of directors unanimously adopted the merger agreement (with Edward L. Baker, John D. Baker II and Thompson S. Baker II abstaining). The Florida Rock board unanimously recommends (with Edward L. Baker, John D. Baker II and Thompson S. Baker II abstaining) that Florida Rock shareholders vote “FOR” approval of the merger agreement.

 

In early January 2007, at the request of Messrs. John and Ted Baker, Weil, Gotshal & Manges, LLP, legal counsel to Florida Rock, contacted several financial advisory firms, including Lazard Frères & Co., on a confidential basis, without naming Florida Rock or its industry, to determine each firm’s availability to accept an engagement on behalf of Florida Rock, as well as the fees such firms would charge for their advisory services. Based on the results of these initial contacts, the views of Florida Rock’s directors and subsequent discussions between Lazard and Florida Rock’s management, Lazard was retained by Florida Rock, pursuant to an engagement letter dated January 25, 2007, to act as its financial advisor in connection with the potential transaction, to assist in negotiating the financial terms of the potential transaction, and, if necessary, to opine on the fairness of the consideration to be received by the shareholders of Florida Rock in the potential transaction. Florida Rock selected Lazard based on Lazard’s qualifications, expertise and reputation. In connection with Lazard’s engagement, Florida Rock requested that Lazard evaluate the fairness, from a financial point of view, to the holders of Florida Rock

common stock (other than Vulcan and its direct and indirect wholly-owned subsidiaries) of the merger consideration to be paid to such holders in the Florida Rock merger. On February 19, 2007, at a meeting of the Florida Rock board of directors held to evaluate the mergers, Lazard rendered to the Florida Rock board of directors an oral opinion, which opinion was subsequently confirmed by delivery of a written opinion dated February 19, 2007, the date of the merger agreement, to the effect that, as of that date and based on and subject to the considerations, assumptions and limitations described in its opinion, the merger consideration to be paid to the holders of Florida Rock common stock (other than Vulcan and its direct and indirect wholly-owned subsidiaries) in the Florida Rock merger was fair, from a financial point of view, to such holders.

 

The full text of Lazard’s written opinion, dated February 19, 2007, to the Florida Rock board of directors is attached as Annex D to this proxy statement/prospectus. Holders of shares of Florida Rock common stock are urged to, read this opinion carefully and in its entirety.

 

In connection with its opinion, Lazard:

 

 

In performing this review, Lazard relied upon the accuracy and completeness of the foregoing information and did not assume any responsibility for any independent verification of such information or any independent valuation or appraisal of any of the assets or liabilities of Florida Rock or Vulcan, or concerning the solvency or fair value of Florida Rock or Vulcan. With respect to financial forecasts of Florida Rock and Vulcan, Lazard assumed that they had been reasonably prepared on bases reflecting the best currently available estimates and judgments of management of Florida Rock and Vulcan, respectively, as to the future financial performance and results of operations of Florida Rock and Vulcan, respectively. Lazard assumed no responsibility for and expressed no view as to such forecasts or the assumptions on which they were based.

 

Further, Lazard’s opinion was necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to Lazard as of, the date of its opinion. Lazard assumed no responsibility for advising any person of any change in any matter affecting its opinion or for updating or revising its opinion based on circumstances or events occurring after the date thereof. Lazard did not express any opinion as to any tax or other consequences that might result from the mergers, nor did its opinion address any legal, tax, regulatory or accounting matters, as to which Lazard understood that Florida Rock obtained such advice as Florida Rock deemed necessary from qualified professionals. Lazard did not express any opinion as to the price at which

shares of Florida Rock common stock or Vulcan common stock may trade at any time subsequent to the announcement of the mergers.

 

In connection with the preparation of its opinion, Lazard was not authorized by Florida Rock or the Florida Rock board of directors to solicit, nor did it solicit, third-party indications of interest for the acquisition of all or any part of Florida Rock.

 

In rendering its opinion, Lazard assumed that the mergers will be consummated on the terms described in the merger agreement and without any waiver, amendment or modification of any material terms or conditions of the merger agreement and the receipt of the necessary regulatory approvals for the mergers in the time frame contemplated by the merger agreement.

 

Lazard’s engagement and its opinion were for the benefit of the Florida Rock board of directors in connection with its consideration of the mergers. Lazard’s opinion did not address the merits of the underlying decision by Florida Rock to engage in the mergers or the relative merits of the mergers as compared to other business strategies or transactions that might be available to Florida Rock. Lazard expressed no opinion or recommendation as to how the holders of Florida Rock common stock should vote at any shareholders meeting to be held in connection with the mergers.

 

In preparing its opinion to the Florida Rock board of directors, Lazard performed a variety of financial and comparative analyses, including those described below. The summary of Lazard’s analyses described below is not a complete description of the analyses underlying Lazard’s opinion. The preparation of a fairness opinion is a complex analytical process involving various determinations as to the most appropriate and relevant methods of financial analyses and the application of those methods to the particular circumstances and, therefore, is not readily susceptible to summary description. In arriving at its opinion, Lazard made qualitative judgments as to the significance and relevance of each analysis and factor that it considered. Accordingly, Lazard believes that its analyses must be considered as a whole and that selecting portions of its analyses and factors, or focusing on information presented below in tabular format, without considering all analyses and factors or the narrative description of the analyses, could create a misleading or incomplete view of the processes underlying its analyses and opinion.

 

In its analyses, Lazard considered industry performance, regulatory, general business, economic, market and financial conditions and other matters, many of which are beyond the control of Florida Rock and Vulcan. No company, transaction or business used in Lazard’s analyses as a comparison is identical to Florida Rock or Vulcan or the proposed mergers, and an evaluation of the results of those analyses is not entirely mathematical. Rather, the analyses involve complex considerations and judgments concerning financial and operating characteristics and other factors that could affect the acquisition, public trading or other values of the companies, business segments or transactions being analyzed.

 

The estimates contained in Lazard’s analyses and the ranges of valuations resulting from any particular analysis are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than those suggested by the analyses. In addition, analyses relating to the value of businesses or securities do not purport to be appraisals or to reflect the prices at which businesses or securities actually may be sold. Accordingly, Lazard’s analyses and estimates are inherently subject to substantial uncertainty.

 

Lazard’s opinion and financial analyses were only one of many factors considered by the Florida Rock board of directors in its evaluation of the proposed mergers and should not be viewed as determinative of the views of the Florida Rock board of directors or management with respect to the mergers or the merger consideration to be received in the Florida Rock merger by holders of Florida Rock common stock.

 

The following is a summary of the material financial analyses underlying Lazard’s written opinion dated February 19, 2007 delivered to the Florida Rock board of directors in connection with the mergers. The measures chosen for analysis were selected by Lazard as customary and relevant to an acquisition utilizing cash and stock. The financial analyses summarized below include information presented in tabular format. In order to fully understand Lazard’s financial analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial analyses. Considering the data in the tables below without considering the full narrative description of the financial analyses, including the methodologies and assumptions underlying the analyses, could create a misleading or incomplete view of Lazard’s financial analyses.

 

Florida Rock Comparable Public Companies Analysis

 

Lazard reviewed and analyzed selected public companies that it viewed as operating businesses reasonably comparable to one or more of Florida Rock’s businesses (i.e., aggregates, concrete, and cement). Lazard selected these companies on the basis of similarity of the companies products, size, scale, and end markets to those of Florida Rock. With respect to Florida Rock’s aggregates and cement businesses, a set of companies that was primarily engaged in those businesses were available and viewed as reasonably comparable to the respective Florida Rock businesses. For the concrete business, the set of comparable companies deemed most appropriate were diversified building materials companies that had a significant portion of their business in concrete and were therefore viewed as reasonably comparable to the Florida Rock concrete business. In performing this analysis, Lazard reviewed and analyzed certain financial information, valuation multiples and market trading data relating to the selected comparable companies and compared such information to the corresponding information for Florida Rock’s business. This analysis was designed to assess how the market values shares of reasonably comparable publicly traded companies and provide a range of implied equity values per share of Florida Rock common stock.

 

Lazard compared Florida Rock’s business to three aggregates companies, five diversified companies and three cement companies.

 

The aggregates companies were:

 

 

The diversified companies were:

 

 

The cement companies were:

 

 

For each of these companies, Lazard calculated enterprise value as a multiple of projected 2007 EBITDA, as reflected in the Florida Rock financial projections, using equity analyst research reports as of February 15, 2007. In this proxy statement/prospectus, EBITDA means net earnings (loss) before interest expense (income), income tax expense (benefit) and depreciation, amortization and depletion expense and is before the cumulative effect of a change in accounting principle, if applicable. The following table summarizes the results of this review:

 

 

Lazard calculated implied per share equity values for Florida Rock common stock by applying estimated 2007 EBITDA multiples to the projected 2007 EBITDA of the business units of Florida Rock reflected in the Florida Rock financial projections, as set forth in the table below:

 

 

For the Florida Rock corporate unit, Lazard applied a multiple of 8.9x. Based on this analysis, Lazard calculated an implied equity value range per share of Florida Rock common stock of $48.25 to $56.50 and an implied exchange ratio of 0.4289 to 0.5622. Lazard noted that the cash consideration in the Florida Rock merger is $67.00 per share and the stock exchange ratio in the Florida Rock merger is 0.6300.

 

Precedent Merger Transactions Analysis

 

Lazard also performed a precedent merger transaction analysis, which was designed to provide a valuation of Florida Rock based on publicly available financial terms of selected transactions in the heavy building materials industry. In selecting the transactions it used in this analysis, Lazard reviewed merger transactions since 1997 involving companies in the heavy building materials industry. Lazard reviewed transactions since 1997 to obtain a

broad set of meaningful and relevant transactions to benchmark. The precedent transactions selected by Lazard were (listed by date publicly announced followed by the acquiror and the target company):

 

 

 

 

For each selected comparable transaction, Lazard calculated the multiple of total transaction value to EBITDA of the acquired business for the latest 12-month period preceding the acquisition announcement. The table below summarizes the results: