Back to top

Analyst Blog

Zacks Equity Research

Dycom to Buy Quanta's Telecom Biz

PWR DY FLR

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Dycom Industries, Inc. (DY - Analyst Report) announced the signing of an agreement with Quanta Services, Inc. (PWR - Analyst Report) to acquire all the domestic telecommunications infrastructure services units of Quanta for approximately $275 million. The deal is expected to be closed by December 31, 2012, subject to regulatory approvals.

Headquartered in Palm Beach Gardens, Florida, Dycom Industries is a leading provider of specialty contracting services. Its offerings include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities and other construction and maintenance services to electric and gas utilities and others.

The acquisition is a strategic fit and perfectly complements Dycom’s existing business, as the to-be-acquired units offer contracting services like engineering, construction, maintenance and installation to telecom companies and other construction and maintenance services to electric and gas utilities. These units are expected to generate revenues of $400 million to $450 million in calendar year 2013.

This acquisition is expected to strengthen Dycom’s customer base, geographic presence, and technical service offerings. Further, the acquisition significantly enhances Dycom’s rural telecommunications engineering and construction capacities, provides additional construction resources for wireless carriers and boosts the company’s already-robust broadband construction capabilities.

Given the recent industry trend of growing investments from the customers and a very attractive financing environment, Dycom believes that this is the opportune moment to increase its scale of operations. 

Quanta’s telecom subsidiaries currently operate in 49 states, serving over 300 individual customers. Its principal business facilities are primarily located in Arizona, California, Florida, Georgia, Minnesota, New York, Pennsylvania and Washington. Revenue generated over the past 12 months was about $535 million.

Excluding one-time transaction and integration costs of approximately $12 million to $15 million, the acquisition is expected to be accretive to Dycom’s earnings by 5 cents to 10 cents per share annually, after non-cash amortization expense.

Quanta Services Inc. is a leading national provider of specialty contracting services, and is one of the largest contractors serving the transmission and distribution sector of the North American electric utility industry. The company primarily competes with Fluor Corporation (FLR - Analyst Report) and currently holds a Zacks #2 Rank, implying a short-term (1-3 months) Buy rating on the stock. 

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%