Arcosa Announces Agreement to Acquire ACG Materials

Acquisition Adds Specialty Materials and Aggregates Platforms Serving Attractive Infrastructure Markets


Arcosa, Inc. Announces Definitive Agreement to Acquire ACG Materials

  • Acquisition Adds Specialty Materials and Aggregates Platforms Serving Attractive Infrastructure Markets

  • Expected to be Slightly Accretive to Earnings in Year One Following Transaction Completion

  • Conference Call Scheduled for 5:30 p.m. Eastern Time Today to Discuss the Transaction

DALLAS, Texas – ARCOSA, Inc. – November 14, 2018:
Arcosa, Inc. (NYSE: ACA) (“Arcosa” or the “Company”), a manufacturer of infrastructure-related products and services, today announced that it has reached a definitive agreement with an affiliate of H.I.G. Capital, LLC to acquire the ACG Materials business (“ACG”) for approximately $315 million.

ACG is a producer of specialty materials and aggregates with estimated revenues of approximately $152 million and adjusted EBITDA of approximately $32 million for the trailing twelve month period ended August 31, 2018, resulting in a purchase multiple of approximately 9.8x.

Arcosa expects the transaction to be slightly accretive to earnings in the first year following transaction completion.

Based in Norman, Oklahoma, ACG mines, mills, processes, and distributes a broad range of specialty materials and aggregates. Its primary products are sold to infrastructure and building products markets, as well as to the agriculture, food, and pharmaceutical industries. ACG adds 24 active mines and 5 production facilities to Arcosa’s 18 active aggregates and specialty materials locations, and is expected to expand the current annualized revenues of Arcosa’s Construction Products segment by roughly 50%, to approximately $450 million. ACG’s operating facilities are located in Texas, Florida, Oklahoma, Kansas, Missouri, Washington, Nevada, and British Columbia.

Commenting on the transaction, Antonio Carrillo, Arcosa’s President and CEO, noted, “The acquisition of ACG demonstrates early execution on key elements of our strategic growth plan: to expand our Construction Products business and to grow in attractive markets.

“ACG is a strategically important acquisition, adding significant scale to the Construction Products segment, extending our specialty product portfolio and geographic reach, and expanding our end markets. Additionally, ACG’s experienced leadership team brings a track record of operating excellence and growth. We look forward to leveraging their expertise as we continue to expand our Construction Products segment through organic growth initiatives and acquisitions.”

Paul Harrington, President of ACG added, “Arcosa provides an excellent platform for us to continue growing through organic investments and bolt-on acquisitions. Our management team is very enthusiastic about this combination, and we look forward to working with our counterparts in Arcosa’s Construction Products segment to drive profitable growth.”

The Company expects to fund the approximate $315 million purchase price with a combination of cash on-hand and advances under its $400 million five year, credit facility. The transaction, which has been approved by the Company’s Board of Directors, is subject to customary closing conditions and regulatory provisions under the Hart-Scott-Rodino Act.

The transaction is expected to close in the fourth quarter of 2018 or first quarter of 2019. After closing and additional clarity on purchase price accounting, the Company expects to revisit its revenue and EBITDA guidance for fiscal year 2019.

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About the Author:

Jim Madsen has been in the communications and marketing fields for over 25 years. He is currently the marketing manager for ACG Materials.