Background and Challenge

In the wake of two major corporate mergers in the cement and aggregates industry, the competitive environment was poised to fundamentally change in many North American markets. As a result of one of the mergers, the Department of Justice had ruled that many of the new company’s combined assets on the ground were to be divested.

Florida, for the prior 10 years, had been one of the most attractive markets in the world for these commodities. The client, the North American division of a global construction materials company, had been interested in the market for some time and was developing new upstream cement capacity in Florida. They engaged L.E.K. Consulting to assess the fundamental attractiveness of these assets to determine which ones they should pursue and the relative value of each potential acquisition.

Approach and Recommendations

The client identified seven Metropolitan Statistical Areas (MSAs) with 38 potential divestiture assets. Our team conducted a market, strategic and competitive assessment on these assets based on interviews and secondary research. Analyses included:

  • Defining the residential housing outlook by county in Florida
  • Assessing the impact of vertical integration
  • Determining the capacity of ready-mix facilities to proxy the competitive situation (including satellite photos as a source)

Based on our research, the team ranked each of the divestiture assets on a number of key metrics. Using Moody's economic data, our team prioritized MSAs based on construction growth activity over the forecast period, and developed a recommendation for the client on the most attractive MSAs.

In addition, our primary research approximated the relative competitive position of each of the major ready-mix concrete players in Florida based on truck counts acquired. Lastly, the team developed a relative supply cost position analysis for each of the ready-mix concrete facilities in Florida based on how upstream assets were transported and utilized by each of the concrete competitors.


The client was able to leverage the findings to inform its entry and bid strategy, and prioritize which divestiture assets to acquire.

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