) has entered into an agreement to buy Brinderson, L.P. The
company will acquire shares of Brinderson and its related
entities for roughly $150 million. The acquisition is expected to
close on or around July 1, 2013.
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Headquartered in Costa Mesa, Calif., Brinderson is a leading
integrated service provider of maintenance, construction,
engineering and turnaround activities for the upstream and
downstream oil and gas markets. The acquisition will help
Brinderson to enter new markets and support the continued growth
in its West Coast market. Brinderson's senior management team,
including its President and Chief Executive Officer (CEO),
Russell Conda, will remain with the company after the deal
Aegion, however, will benefit from the combined strength of
Brinderson's safety records, strong reputation and comprehensive
solutions. Aegion, with the help of Brinderson's long-term
association with large and blue chip companies, will get access
to the upstream and downstream markets. Aegion will be able to
preserve and rehabilitate its vital pipeline assets. It will also
assist the company to compete for its energy value chain, which
is worth around $800 to $900 million along with maintaining the
facilities used for processing and refining oil and gas products
of its Energy & Mining platform.
As of Mar 31, 2013, Brinderson's revenues were around $231
million and adjusted EBITDA was $23.8 million. Almost 75% of
revenue comes from recurring activities comprising long-term
projects. On the other hand, Aegion derived around 45% of its
total revenue from recurring activities of its Energy &
Mining platform. However, the acquisition will aid 5% more
revenues to the Energy & Mining segment.
Aegion expects the acquisition to be modestly accretive in 2013,
while it will be more accretive in 2014. Aegion maintains its
earnings per share guidance for 2013 in the range of $1.60 to
$1.80, excluding $4 to $7 million expenses related to the
acquisition. The company has lowered its outlook for Return on
invested capital (ROIC). The new ROIC is expected to be in the
range of 7% to 8% for 2013, driven by the increase in intangible
assets and a partial earnings contribution from Brinderson. It
also expects the acquisition to be accretive to free cash flow in
2013 as a result of Brinderson's low capital expenditure
Aegion's results for 1Q13 ranked lowest in terms of earnings with
a meager contribution of 10% of total earnings for the year, due
to delays caused by weather and the seasonal low period for many
of its businesses. Given the favorable outlook of its markets,
Aegion expects to make up for this slow start to the year during
the balance of 2013 on the back of its strong backlog and a
robust bid table supporting the opportunity for securing
additional projects. However, the Brinderson acquisition marks
the beginning of a strategic effort to expand its capabilities in
the US energy market.
Chesterfield, Mo.-based, Aegion has revised its current credit
facility for the transaction. In addition, the company is working
with its lending partners,
Bank of America, N.A.
J.P. Morgan Chase Bank N.A.
U.S. Bank National Association
) to introduce a new and expanded credit facility. The new
facility will fund the transaction. It will also provide
sufficient flexibility for the future liquidity needs and growth
prospects of Aegion.
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 # 3(Hold).