Quanta Services, Inc. (PWR) signed an agreement to acquire privately-held Price Gregory Services, Inc., an energy infrastructure services provider in North America that specializes in the construction of large diameter transmission pipelines.
This transaction, which is expected to close in the fourth quarter of 2009, is valued at $350 million. Quanta will issue approximately 11.1 million shares of its common stock, valued at $250 million, and will pay approximately $100 million in cash, subject to adjustment, to the stockholders of Price Gregory.
This acquisition further strengthens Quanta’s leadership position in the North American electric power transmission industry. The company said that Price Gregory will significantly expand the scale and scope of Quanta’s existing natural gas operations and will position it to take advantage of the positive long-term outlook for the natural gas industry.
Quanta expects a substantial increase in revenues and earnings, strong margins, and significant free cash flows with the addition of Price Gregory to its portfolio. The company said that Price Gregory is expected to achieve revenues between $1.1 billion and $1.2 billion and EBITDA between $170 million and $190 million for 2009. For 2010, revenues are expected between $700 million and $900 million. This transaction is expected to add $0.13 to $0.21 per share (before amortization expenses) to Quanta’s earnings in 2010.
Given the need for natural gas to meet the country’s energy independence and clean energy goals, Quanta is very bullish on long-term growth opportunities in the natural gas infrastructure market. The company stated that there are currently more than 50 major pipeline projects approved or under construction in the U.S., with scope for more.
With the additional resources from Price Gregory acquisition, Quanta is confident of capitalizing on the attractive opportunities arising from the requirement for new pipeline infrastructure to transport natural gas from the newly-discovered reserves to end markets.
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