January 3, 2022
MasTec Inc. has completed the previously announced acquisition of Henkels & McCoy Group Inc. in a cash and stock transaction valued at approximately $ 600 million.
Henkels is one of the largest electricity transmission and distribution utilities in the United States and the 5th largest U.S. utility contractor in the recent 2021 Engineering News-Record ranking.
“We are delighted to officially welcome the more than 5,100 Henkels team members to the MasTec family,” MasTec CEO Jose Mas said in a December 30 statement. “We believe the addition of Henkels, coupled with MasTec’s existing operations, creates a market-leading utility contractor with significant expertise, scale and capacity that can deliver a comprehensive and compelling range of service offerings. to our customers as they work to transition to renewable energy production, modernize power grids and reduce carbon emissions.
Founded in 1923, Henkels has been in business for over 98 years, with revenues of approximately $ 1.5 billion in fiscal 2021, primarily with long-standing relationships with a diverse, blue-chip customer base, with extensive geographic operations across the United States.
“This marks an important step in the diversification of MasTec’s end-market service portfolio, providing us with strong opportunities for strategic growth,” added Mas. “We believe the transition to renewable energy production will create significant growth demand in the utility sector. MasTec’s range of services, from clean power generation to our new power transmission and distribution capacity, positions us for strong growth in this expanding market.
First announced on December 20, the total amount of the transaction will be $ 600 million, of which approximately $ 420 million in cash (including the repayment of Henkels’ debt) plus approximately 2 million common shares of MasTec, subject to customary purchase price adjustments. Liquidity will be provided by MasTec’s liquidity, as well as by borrowings under its existing unsecured credit facility. MasTec expects post-acquisition leverage to remain comfortably within its target range with abundant liquidity.
“As a third generation family business, we have carefully evaluated several alternatives for our operations,” said Rod Henkels, CEO of Henkels & McCoy. “Our choice of MasTec was based on the strong cultural fit of our loyal employees and long-term customers. In addition, we believe that MasTec offers significant opportunities for strategic growth and, as proof of our firm belief in the merits of this combination, my brother Paul and I have requested and will receive a significant portion of the proceeds from the transaction in MasTec. ordinary actions.”
The transaction supports MasTec’s long-term strategy to expand into the rapidly growing electric utility market with incremental recurring revenues tied to main service contracts. While significant revenue and operating margin opportunities are expected to materialize from this combination, none of these potential opportunities are included in the current expectation that the 2022 results of Henkels will move closer to those in fiscal 2021 at around $ 1.5 billion in revenue and $ 70 million in adjusted revenue. EBITDA. The actual results for fiscal 2021 and the expected results after the 2022 acquisition reflect the impacts of the underperformance of communications and pipeline services operations, which are expected to improve over time.
The transaction was unanimously approved by the board of directors of MasTec and Henkels, as well as the shareholders of Henkels.
Holland & Knight LLP acted as legal counsel to MasTec. Houlihan Lokey acted as exclusive financial advisor and Sidley Austin LLP as legal advisor to Henkels.
Tags: Henkels and McCoy, MasTec, mergers and acquisitions