Summit Materials (SUM) Stock Gains Big On Merger Talks

Summit Materials SUM Stock News

Summit Materials Inc (NYSE: SUM) is up more than 17% in mid-day trading today after the company found its way to headlines about merger talks. Apparently, a Columbian industrial conglomerate is interested in merging with the company.

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SUM In Merger Talks

Summit Materials is taking center stage in market headlines today as news breaks that the company is in talks surrounding a potential merger. According to various reports, a Columbian industrial conglomerate by the name of Grupo Argos has approached the company about a potential merger.

Groupo Argos’ footprint spans energy and building materials. Interestingly, if the deal were to take place, it would be a strong move for both sides. First and foremost, SUM stock holders would likely enjoy a strong premium in a value-add transaction.

On the other side of the coin, Grupo Argos would benefit from a strong footprint in the United States and a move to consolidate its sector in a more stable economy, building its overall strength.

According to sources close to the story, Grupo Argos has a goal of combining one of its subsidiaries, Cementos Argos SA, with Summit Materials.

Grupo Argos sees value in combining Cementos Argos SA, one of its subsidiaries, with Summit Materials and gaining scale, the sources said. However, there is no certainty that Summit Materials will negotiate a deal with Grupo Argos, the sources added.

A Great Time For A Deal

Should all go well, the timing is perfect for Summit Materials and its investors. After all the cement sector is seeing strength at the moment, with global demand seeing strong growth. Estimates suggest that this growth will continue.

Considering recent gains in SUM stock, the company is valued at about $1.8 billion. With strong growth in the sector expected ahead, there’s a good chance that the premium offered in a merger would be at least 10% or greater. All in all, if a deal was going to be made, now is a great time to ensure that it comes with strong investor value.

Consider The Risk

At the moment, what we’re really seeing is rumors. No one seems to be naming their sources under the veil of confidentiality for those close to the matter. Also, neither of the companies involved are willing to make a comment in relation to the merger talks.

As such, there can be no assurance that a deal is going to be made, or that one is even being talked about. After all, rumors are one of the most common ways that the market is manipulated. So, if you’re going to buy into the rumor, make sure that you consider the risks.

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What Do You Think?

Do you think SUM will reach a merger agreement? Join the discussion in the comments below!

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