Quanta Services Inc. (Houston, Texas, U.S.) announced in mid-March that it will acquire InfraSource Services Inc. (Media, Pennsylvania, U.S.) in an all-stock transaction valued at US$1.26 billion, based on Quanta's closing stock price on March 16, 2007. InfraSource's companies include Dashiell, M.J. Electric, Transmission Services (formerly Maslonka), Underground Services, Engineering (including REAL Time Utility Engineers and Technology) and Blair Park/Sunesys.
“The timing is right for this transaction,” says Quanta Services Chairman and CEO John Colson, who will remain in that position after the deal is done. “As a larger, stronger company, Quanta will be in an optimal position to leverage the industry trends that we're now seeing across the power and telecommunications sectors.”
With utilities in the process of upgrading aging and overloaded T&D infrastructure and spending more on core T&D assets, the acquisiton will allow Quanta to cover the breadth of services that utilities are seeking in contractors these days. Quanta intends to leverage the combined company's workforce of more than 16,000 employees. “The combined company will have the ability to offer an even more comprehensive portfolio of services to our customers, from the design and engineering to installation and maintenance, to energized services and emergency restoration,” says Colson.
In addition to being able to offer a more comprehensive set of services, the combined company will have a geographic footprint that reaches every state in the United States, as well as parts of Canada, which will “help to fully flesh out our national coverage,” Colson notes.
Based on 2006 results, the combined company will have revenue of US$3.1 billion and adjusted earnings before income tax, depreciation and amortization of $270 million. The combined company expects to realize $20 million of cost and operational synergies in 2008 by integrating project and asset management, making workforce efficiencies and combining procurement functions. The company expects to accelerate revenue growth through cross-selling and marketing opportunities.
The deal is expected to close in the third quarter of 2007, and Quanta does not foresee any issues with receiving stockholder and regulatory approvals, as the two companies have less than a 10% share of most of the markets they serve. The combined company will keep Quanta's name and will be headquartered in Houston, while InfraSource's current Media headquarters will become a regional office for Quanta. Following the closing of the deal, the board will be comprised of 11 Quanta and 3 InfraSource representatives, including David Helwig, currently the chairman, president and CEO of InfraSource Services.