) has announced the sale of its 50% interest in a German joint
venture Insituform Rohrsanierungstechniken GmbH
(Insituform-Germany) to Denmark's Per Aarsleff A/S (Aarsleff) for
€14 million ($18.3 million).
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Insituform-Germany was jointly owned by Aegion and Aarsleff.
Insituform-Germany provides sewer rehabilitation services in
Germany and through its subsidiaries it offers the services in
Slovakia, Hungary and The Czech Republic. It generated revenues
of approximately €72 million ($89 million) in 2012.
Moreover, Aegion entered into a product supply agreement with
Insituform-Germany, whereby the latter will purchase at least
£2.3 million ($3.6 million) of felt cured-in-place pipe (CIPP)
liners annually from Jun 26, 2013 to Jun 30, 2015.
The divestiture is a wise move as the German CIPP contracting
market is highly competitive and fragmented and returns from the
joint venture have trailed for a number of years. Aegion had
suffered losses of $0.9 million in fiscal 2012 and $0.3 million
in the first quarter of 2013 from Insituform-Germany's operation.
After shedding this underperforming unit, Aegion will be able to
focus its resources and efforts on higher return businesses and
growth of third-party product sales in Europe. The sale is
consistent with Aegion's strategy to optimize its product and
service mix as per the market requirements of individual
countries, in turn improving the overall return of its
With this transaction, Aegion will continue to provide felt CIPP
liners to Insituform-Germany until Jun 30, 2015. It also will
immediately market Aegion's glass CIPP liners in Germany, the
largest CIPP market in Europe. The transaction is expected to
result in a pre-tax gain on sale of investment of approximately
Aegion Corporation provides proprietary technologies and services
to protect against the corrosion of industrial pipelines and for
the rehabilitation and strengthening of water, wastewater, energy
and mining piping systems and buildings, bridges, tunnels and
Aegion currently holds a Zacks Rank #2 (Buy). Other favorable
investment options in the construction sector include
Dycom Industries Inc.
), with a Zacks Rank # 1 (Strong Buy), and
EMCOR Group Inc.
Orion Marine Group, Inc
), carrying a Zacks Rank #2 (Buy).