Mergers and acquisitions (M&A) activity has fluctuated quite notably post-COVID, with lingering uncertainty and a whole host of other issues weighing down deal-making since.
But over the last year, it’s slowly returning to the market, with several companies, including Sterling Infrastructure STRL, making a splash in one way or another.
Let’s take a closer look at the recent transaction.
Sterling Acquires CEC Facilities
Fresh off the press this week, Sterling Infrastructure made a huge splash by announcing the acquisition of Texas-based CEC Facilities Group, LLC (CEC), which is a leading specialty electrical and mechanical contractor.
The total deal amounts to $505 million, comprising $450 million in cash and $55 million in STRL stock. Concerning the deal, CEO of STRL, Joe Cutillo, said –
“We believe that the combination of CEC’s leading mission-critical electrical services and Sterling’s best-in-class site civil infrastructure services will allow us to accelerate project timelines and become even more valuable to our customers. We welcome CEC to our team and believe their strong values, commitment to customers, and entrepreneurial spirit align perfectly with Sterling.”
The market was a big fan of the move, sending STRL shares well higher in the session. Now up more than 30% YTD, the stock has outperformed the S&P 500.
Image Source: Zacks Investment Research
CEC will join Sterling’s E-Infrastructure Solutions segment, a move aimed at bolstering its Data Center capabilities amid the current AI frenzy. Sterling’s E-Infrastructure Solutions segment provides advanced, large-scale site development services for manufacturing, data centers, distribution centers, warehousing, power generation, and more.
It overall appears to be a great deal for STRL, which is also immediately accretive to its earnings, although the amount will depend on the timing of the closing. Current timing expectations suggest roughly five months of contribution in 2025.
Notably, the stock headed into the acquisition news in an already-bright situation, currently sporting a Zacks Rank #2 (Buy). As shown below, EPS expectations have already been trending higher across the board over recent months.
Image Source: Zacks Investment Research
Bottom Line
While M&A activity has fluctuated post-pandemic, we’ve still seen several notable deals get made, with Sterling Infrastructure STRL the latest example.
The move appears to be highly positive, given its current exposure to the data center angle of the AI frenzy, which is still in its early innings.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
