Valmont Industries Inc. (VMI), a U.S. maker of lightning poles and support structures, has agreed to acquire British industrial engineer Delta Plc. for $429.1 million or £284.5 million in cash. The offer represents a premium of 20.3% to Delta’s closing price on Mar 3, 2009. Valmont stated that the offer price was determined on the basis that Delta will not pay a final dividend for the year ended Dec 31.
Valmont expects to close the transaction in the second quarter of 2010. The company expects the deal to add to its earnings in 2011.
Delta is a manufacturer of support structures for the lighting, wireless and utility industry, industrial access systems and road safety systems in the U.K. The company has operations in Australia, New Zealand, the U.S., China, South Africa and throughout Southeast Asia. Delta’s engineered support structures business and galvanizing facilities add size and geographic coverage to Valmont’s current businesses.
Valmont believes that Delta’s access systems and road safety businesses will bring new growth platforms. With leadership positions in the fast growing Asian markets and in Australia’s strong resource driven economy, Delta should strengthen Valmont’s base.
Valmont is the global leader in designing and manufacturing poles, towers and structures for lighting and traffic, wireless communication and utility markets, and a provider of protective coating services. Valmont also leads in mechanized irrigation equipment for agriculture, enhancing food production while conserving and protecting natural water resources.
Valmont has expanded operations both organically and inorganically. We expect strong North American spending on electric transmission as well as increased North American expenditure fueled by a highway bill − expected as late as the end of 2010 − to drive its top line. Strong global growth in utility, traffic and wireless communication structures and irrigation equipment will also bolster revenues.
However, the weak commercial construction and residential housing markets in the US have impacted lighting structure sales. Lower productivity in North American structures operations has also lowered profitability in the Irrigation segment. Nonetheless, we expect steady margins for Valmont with the recovery in the economy.
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