The Federal Trade Commission on Friday announced that Lehigh Cement Co. and rival Keystone Cement Co. have decided to abandon their proposed merger. The news comes about two weeks after the FTC said it was challenging Lehigh Cements planned $151 million acquisition of Keystone Cement, which has a plant straddling East Allen Township and Bath.
This is great news for cement customers in eastern Pennsylvania and western New Jersey, Acting Bureau of Competition Director Maribeth Petrizzi said in a statement. The FTC voted 4-0 to challenge this transaction because it would have reduced the number of significant competitors in the market for gray portland cement in this region from four to three.
The deal, announced in September 2019, called for Lehigh Cement to acquire the Keystone plant from Giant Cement, the U.S. cement subsidiary of Mexicos Elementia, S.A.B. de C.V. The transaction, at that time, was expected to close in a matter of months.
In its merger review, the FTC specifically pointed out that Lehigh Cement owns and operates two cement plants serving customers in eastern Pennsylvania and western New Jersey. Keystone Cement, the FTC said, provided intense competition, which helped to keep market prices down.
Across the area, the FTC found, customers said there were only four firms that operate plants in the Lehigh Valley region and were viable cement suppliers: Lehigh Cement, Keystone Cement, LafargeHolcim in Whitehall Township and Hercules Cement in Stockertown.
Cement customers in the relevant market have benefited from substantial head-to-head competition between Lehigh and Keystone, the FTC wrote in its complaint last month. Keystone has aggressively used low prices to compete for business, often undercutting prices of Lehigh to win new customers or gain additional business.
In a statement last month, Lehigh Hanson disagreed with the FTCs allegations, arguing the acquisition would be an excellent strategic fit for Lehigh Hanson and this transaction would be beneficial to our customers, employees and stakeholders.
The Keystone plant, which has been operating since 1928 and employed 132 people as of 2019, supplies the Pennsylvania, New Jersey and New York markets with bulk and bagged portland cement. The operation encompasses more than 800 acres, predominantly in East Allen with a small portion in Bath, according to property records.
The Keystone plant received reinvestment when a kiln line was modernized in 2009, with a capacity of 1.1 million tons of cement annually. A report from Giant Cement indicated the modernization project carried an investment of $230 million.Get in Touch with Mechanic