EMCOR Group Inc. (EME - Analyst Report) signed a definitive agreement to acquire RepconStrickland in an all cash deal valued at $455 million. Subject to regulatory approvals, the acquisition is expected to close by Jul 2013. J.P. Morgan Securities LLC will be the financial advisor to EMCOR Group, while Harris Williams & Co. will be the exclusive financial advisor to RepconStrickland.
Based in La Porte and Corpus Christi, Texas, RepconStrickland is one of the leading U.S. industrial and refinery service companies. It is a leading provider of turnaround and specialty services to the North American refinery and petrochemical markets. RepconStrickland has a proven track record of solid project execution and an industry-leading safety record as well. In addition, the company is a renowned leader in executing turnarounds for critical process units. In 2012, RepconStrickland reported revenues of $440 million.
The acquisition of RepconStrickland is a strategic move by EMCOR as it strengthens the latter’s position in the industrial and energy sectors, which at the moment are attractive industries offering a good growth potential.
The acquisition complements EMCOR’s existing line of business. With RepconStrickland on board, EMCOR will be able to offer new and better opportunities to its customers of turnaround services and heat exchangers, thereby improving its customer satisfaction and maximizing labor and shop utilization. EMCOR believes that the acquisition will be accretive to its earnings for the rest of 2013 by about 10 cents per share. Transaction costs related to this acquisition are expected to be in the range of $6.0 million to $7.0 million.
With revenues of approximately $6.3 billion, EMCOR Group is a leader in mechanical and electrical construction, energy infrastructure, and facilities services.
EMCOR currently has Zacks Rank #3 (Hold). Other sector participants worth considering at the moment include Primoris Services Corp (PRIM - Snapshot Report), Orion Marine Group (ORN - Snapshot Report) and Willdan Group Inc. (WLDN). All three carry a Zacks Rank #2 (Buy).