- Martin Marietta Materials (MLM) made an unsolicited bid to acquire Vulcan Materials (VMC) but the offer of 0.5 MLM shares for each VMC share was deemed too low by the analyst. - While the offer was reasonably certain, it did not represent a reasonable premium to VMC's standalone valuation or historical trading ratios with MLM. - There was potential conflict of interest as VMC's CEO insisted on retaining a leadership role in the combined company during negotiations. - However, MLM may still succeed in the proxy contest due to significant overlapping shareholders in both companies who would benefit financially from the merger.

1. The Shareholder Communication Strategists
The objective of the Activist Situation Report is to highlight key issues that might be raised by the
dissident investor in a proxy contest. This report is not intended to provide voting recommendations.
For a more detailed discussion of our analysis, please contact Waheed Hassan, CFA at
whassan@allianceadvisorsllc.com or 202-549-8399.
Summary
• On December 12, 2011, MLM publicly disclosed its unsolicited bid for Vulcan stock by offering 0.5
shares of MLM stock for each Vulcan common stock. Concurrently, MLM also commenced an
exchange offer for all of the outstanding shares of Vulcan common stock. The Exchange Offer is
scheduled to expire on May 18, 2012, unless further extended by MLM. Since 2010, Vulcan and
MLM had engaged in potential merger discussions but failed to reach an agreement.
• Following rejection of its offer, MLM initiated a proxy contest to replace five incumbent nominees at
Vulcan. MLM hopes that election of its nominees would send a strong message to Vulcan board and
management team to engage in merger negotiations.
• Given that this is an M&A driven proxy contest, Vulcan shareholders have to decide if a) the offer is
reasonably certain; b) the value being offered is a reasonable starting point for engagement; and c)
whether Vulcan’s board response was appropriate.
• The proposed merger between Vulcan and MLM makes strategic sense. However, our review of
MLM’s offer suggests that it is not in the range of what Vulcan shareholders might deem as
‘reasonable’. The offer – though certain – provides a meager premium and is almost at par with
Vulcan’s stand-alone valuation. Consequently, we believe, in absence of a higher offer by MLM,
Vulcan shareholders might conclude that the offer is not a reasonable starting point for engagement
and therefore MLM nominees do not deserve a seat at the table – board representation.
• Despite inadequacy of tender offer, MLM may still succeed in proxy contest because of the
significant overlap in the top holders of both companies. These holders may drive the election of
dissident nominees to Vulcan’s board, strictly because they will benefit financially from a merger of
the two companies.
Target: Vulcan Materials Company (VMC)
Activist/Dissident: Martin Marietta Materials Inc. (MLM)
Offer: 0.5 shares of MLM stock for each VMC share
At stake: 5 seats on an 11-member board
Board composition: Classified board
Meeting date: TBD. Last shareholder meeting was held on 05/13/2011.
Probable outcome: In absence of a higher bid, management nominees are
re-elected.
March 9, 2012

2. The Shareholder Communication Strategists
2
Analytical Framework
Alliance Advisors utilizes the same analytical framework that Institutional Shareholder Services (“ISS”)
and many institutional investors use when evaluating M&A related contested solicitation efforts.
Generally, ISS focuses on the following three key considerations for shareholders:
1. Is the offer reasonably certain?
2. Is the value being offered a reasonable starting point for engagement?
3. Has the target board’s response been appropriate?
Note that questions 1 and 2 are critical in determining if dissidents warrant board representation.
Meanwhile, question 3 tries to ascertain if the target board acted in the best interest of its shareholders.
Question 1 – Is the offer reasonably certain?
MLM’s all-stock offer is not subject to financing condition. That said, MLM shareholders would have to
approve issuance of shares for the proposed merger. The risk of MLM shareholders not approving the
deal is fairly limited. As such, the offer can be deemed to be reasonably certain.
Question 2 – Is the offer a reasonable starting point for negotiation?
Historical Exchange Ratio
• MLM’s offer of 0.5 shares of MLM stock for each Vulcan share does not compare favorably with the
historical exchange ratio for the two companies. The offer represents a 9.3% premium to the
unaffected exchange ratio on 12/9/2011, a much smaller 5.4% premium to the 1-year average
exchange ratio and a 4.6% discount the 3-year average exchange ratio.
• Additionally, during periods of stronger economic growth – pre-2008 economic crisis – Vulcan
traded at a significantly higher exchange ratio than MLM’s offer. Given the low implied offer
premium, it seems unlikely that Vulcan shareholders would support MLM nominees in absence of a
higher offer.
• Based on the exchange ratio and MLM’s current share price ($86.39 as of 3/8/2012), the
$43.20/share offer represents a 3.8% discount to Vulcan’s current share price. Though the offer
discount is indicative of market’s desire for a higher price, we believe Vulcan shareholders are
unlikely to support MLM’s bid for board seats unless they see a revised offer which provides a
reasonable premium.

3. The Shareholder Communication Strategists
3
Historical Exchange Ratio
Source: Thomson Reuters. Data as of 3/8/2012.
0
0.1
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3/7/2007
5/7/2007
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11/7/2007
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3/7/2008
5/7/2008
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9/7/2008
11/7/2008
1/7/2009
3/7/2009
5/7/2009
7/7/2009
9/7/2009
11/7/2009
1/7/2010
3/7/2010
5/7/2010
7/7/2010
9/7/2010
11/7/2010
1/7/2011
3/7/2011
5/7/2011
7/7/2011
9/7/2011
11/7/2011
Historical Exchange Ratio
(as of 12/9/2011)
Historical exchange ratio 1-yr avg 3-yr avg Offer
3-yr avg. exchange ratio:0.52x
1-yr avg. exchange ratio:0.47x

4. The Shareholder Communication Strategists
4
Precedent Transaction Analysis
• MLM’s implied valuation is significantly higher than that for precedent transactions, suggesting that
the offer is reasonable. It is important to note that the precedent transactions took place during
robust market conditions, i.e., at relatively high market valuation.
That said, we believe Vulcan could contend that MLM’s implied valuation is high not because of
offer premium but instead due to depressed EBITDA given the cyclical trough for the underlying
business. For instance, Vulcan’s EBITDA declined from $980.6 million in FY07 to $425.2 million in
FY11. Overall, we feel that Vulcan’s argument is likely to resonate with investors. In a normalized
business environment, Vulcan’s EBITDA would be higher, resulting in a lower implied valuation
multiple for MLM’s offer. Consensus estimates suggest Vulcan’s EBITDA will increase to $589 million
by FY2013 and $718 million by FY14 (source: Thomson Reuters).
Precedent Transactions
Source: FactSet; precedent transactions data taken from Florida Rock Industries proxy statement.
Date Announced Acquiror/Target EV/LTM EBITDA
Feb-07 Vulcan Materials/Florida Rock 11.0x
Oct-06 Cemex/Rinker Group 9.4x
Jun-06
Cementos Portland
Valderrives/Corporacion Uniland 13.2x
May-06 Lafarge SA/Lafarge NA 8.3x
Jul-05 Spohn Cement/HeidelbergCement 8.1x
Oct-05 Camargo Correa/Loma Negra 11.6x
Jan-05 Holcim/Aggregate Industries 9.8x
Sep-04 Cemex/RMC 7.6x
Median 9.6x
Mean 9.9x
9-Dec-11 Martin Marietta/Vulcan 18.3x

5. The Shareholder Communication Strategists
5
Stand-Alone Valuation
• Both our stand-alone valuation analysis and analysts’ target price estimate for Vulcan suggests that
MLM’s offer does not represent any significant premium. While MLM is likely to contend that it is
seeking a “merger of equals” transaction and hence did not offer “acquisition premium”, Vulcan
shareholders are likely to treat MLM’s hostile offer as an acquisition of the Company instead and
therefore demand a premium.
Summary Valuation Analysis
Source: Thomson Reuters. Data as of 3/8/2012.
Unaffected Trading Multiples
Source: Thomson Reuters/FactSet. Data as of 3/8/2012.
Peer group is comprised of MLM, CRG-DB, HEI-XE, HOLN-VX, LG-FR, MDU-US, EXP-US,
TXI-US, CEMEX.CPO-MX.
Valuation Calculation
Source: Thomson Reuters/FactSet. Data as of 3/8/2012.
Stand-alone
value
Initial Offer
Price (12/9/2012)
Premium/
(discount)
Current Offer
Price (03/8/2012)
Premium/
(discount)
EV/NTM EBTIDA $45.5/share $36.7/share -19.4% $43.2/share -5.1%
Analyst Target Price (Mean) $43.6/share -15.9% -1.0%
At announcement 12/9/2011 EV/NTM EBITDA
Peer Median 7.9x
Vulcan 16.7
Premium/(Discount) 112.7%
Vulcan's implied trading multiple EV/NTM EBITDA
Current Peer Median (3/8/2012) 8.3x
Adjustment for Vulcan historical premium/(discount) 112.7%
Implied multiple 17.6x
Vulcan's Valuation Estimate EBITDA
Vulcan's NTM consensus estimate (FY2012) $480.6mn
Implied Enterprise Value 8,462.8
Less Debt (as of 12/31/2011) 2,815.4
Add Cash (as of 12/31/2011) 236.8
Implied Equity Value $5,884.2mn
Shares outstanding 129.2mn
Implied Stand-alone value $45.5/share

6. The Shareholder Communication Strategists
6
Analyst Estimates
Source: Thomson Reuters. Data as of 3/8/2012.
Vulcan’s 5-year EV/NTM EBITDA Multiple
Source: Thomson Reuters. Data as of 3/8/2012.
Peer group is comprised of MLM, CRG-DB, HEI-XE, HOLN-VX, LG-FR, MDU-US, EXP-US, TXI-US,CEMEX.CPO-MX
Target Price (USD)
Mean 43.63
Median 42.50
High 61.00
Low 29.00
Standard Dev 10.45
Total # 8
0
2
4
6
8
10
12
14
16
18
20
Historical EV/NTM EBITDA
as of 12/9/2011
VMC Peer Median

7. The Shareholder Communication Strategists
7
Synergies
• Vulcan and MLM have very divergent views of the level of synergies that can be achieved by
combining the two companies. Vulcan estimates potential synergies at $75-$100 million versus
MLM estimate of $200-$250 million. Our calculations show regardless which synergy estimate one
believes, shareholders would benefit significantly from a combination of the two companies. Our
two key assumptions for the said calculations are: (a) EBITDA is increased by the amount of
synergies; and (b) post-merger the combined entity would trade at MLM’s current EV/NTM EBITDA
multiple.
Synergies
Source: Thomson Reuters. Data as of 3/8/2012. Merger related expense from MLM’s SEC filings.
Vulcan estimate MLM estimate
Synergies (low-end of the range) $75.0mn $200.0mn
MLM - EV/NTM EBITDA multiple (current) 12.0x 12.0x
Increase in Enterprise Value due to synergies $901.5mn $2,404.0mn
Less merger related expense 75.0mn 75.0mn
Net impact of synergies on Enterprise Value $826.5mn $2,329.0mn
Post-merger shares outstanding 110.2mn 110.2mn
Synergy value per share $7.5/share $21.1/share
Synergy value % of current offer ($43.2/share) 17.4% 48.9%

8. The Shareholder Communication Strategists
8
Question 3 – Has the target board’s response been appropriate?
Given that Vulcan has yet to file its proxy statement, it is difficult to assess the appropriateness of its
board’s response. The discussion below is based upon MLM’s preliminary proxy statement, a current
source of public information regarding Vulcan’s response to MLM’s offer. As such, it highlights a
potential conflict of interest on Vulcan’s part, as identified in MLM’s preliminary proxy.
• Our analysis above suggests that MLM’s offer is not compelling enough and that Vulcan
shareholders would require an improved bid to support the merger. That said, our read of the
preliminary proxy statement filed by MLM indicates potential conflict of interest.
• Specifically, we note that during negotiations Mr. Donald James – CEO of Vulcan – insisted on
retaining CEO/Chairman position along with control of the top management team of the post-
merger entity. While discussion of post-merger management team is not unusual, generally such
details are finalized towards the end of a merger agreement after financial considerations have been
settled. In this case, however, it appears that Mr. James’ role in the post merger management team
assumed critical significance in the merger discussions. Below are some relevant excerpts from the
preliminary proxy statement.
June 16, 2010 – “Mr. James also stated Vulcan’s position that Mr. James be chief executive
officer of the combined company for a period of three years, followed by an additional period of
three years in which he would serve as executive chairman of the board of directors.” (Page 9.)
November 3, 2010 – “Mr. James indicated that he believed that he should have the role of
Executive Chairman and Mr. Nye should have the role of President, with no chief executive
officer of the combined company. They also discussed the composition of the board of directors
of the combined company and the location of the combined company’s headquarters.” (Page
10.)
April 25 and 26, 2011 – “Mr. James proposed that he manage the combined operations with
direct responsibility for legal, finance, government affairs, strategic planning and Board
management functions, with investor relations, human resources, business development, and
operations functions reporting to Mr. Nye., Mr. James proposed that after an agreed-upon
transition period, Mr. Nye would become chief executive officer of the combined company.”
(Page 11.)
June 27, 2011 – “Mr. James told Mr. Nye that Vulcan would only be interested in a business
combination with Martin Marietta at the market exchange rate without any premium to Martin
Marietta, in which Mr. James would be chairman of the board of directors and chief executive
officer, with a majority of senior management positions held by Vulcan personnel for a
transition period.” (Page 11.)

9. The Shareholder Communication Strategists
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Impact of Overlapping Shareholders
• Given the strategic merits of the deal, shareholders desire to see a combination of the two
companies might lead to greater support for MLM nominees. In January 2012, Southeastern Asset
Management (9.9% stake in Vulcan and 13.3% in MLM) issued a public letter stating that “If Vulcan's
management and board of directors ignore Martin's invitation to resume talks, we will be forced to
vote for Martin Marietta's slate of directors and also contemplate publicly sharing these views with
other Vulcan Materials stakeholders.”
• Lastly, there is a significant overlap between the top 10 shareholders of both companies. This
creates the possibility of such holders supporting MLM nominees even if it doesn’t put the best offer
on the table. By virtue of being significant holders in both companies these shareholders stand to
benefit from the transaction regardless of whether Vulcan receives the highest price.
Common Shareholders of MLM and Vulcan
Source: Thomson Reuters. Data as of 3/8/2012.
Conclusion
Our review of MLM’s offer suggests that it is not in the range of what Vulcan shareholders might deem
‘reasonable’. The offer provides a meager premium and is almost at par with Vulcan’s stand-alone
valuation. Consequently, we believe MLM has not met the burden to warrant a seat at the table –
board representation. That said, given the significant overlap between the top shareholders of both
companies there is a possibility that these overlapping shareholders would support MLM nominees even
if MLM doesn’t put the best offer on the table.
% of common shares outstanding MLM Vulcan
Southeastern Asset Management, Inc. 13.33 9.87
Vanguard Group, Inc. 4.06 5.22
First Eagle Investment Management LLC 5.08 4.48
BlackRock Institutional Trust Company, N.A. 5.02 4.42
Total 27.49 23.99

10. The Shareholder Communication Strategists
10
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Copyright © 2012 by Alliance Advisors, LLC. ALL RIGHTS RESERVED.