Quanta Services acquires Stronghold

Stronghold is a leading specialised services company that provides high pressure and critical path solutions to the downstream and midstream energy markets. The company generated revenues of approximately US$500 million for the full year of 2016 and has a workforce averaging approximately 2800 employees.

The industrial services market is a natural service line expansion for Quanta, further enabling Quanta to meet energy customers' needs. Stronghold's operations will be reflected in Quanta's Oil and Gas Infrastructure services segment.

The transaction consideration consists of an upfront payment of approximately US$450 million, comprised of US$360 million of cash and 2.7 million shares of Quanta Services common stock valued at approximately US$90 million, with a cash and stock earnout that could provide maximum additional consideration of US$100 million if cumulative three-year EBITDA targets are achieved.

Duke Austin, President and Chief Executive Officer of Quanta Services, said: "We remain positive on our 2017 and multiyear outlook and believe Stronghold is a strategic acquisition that will allow us to capture a greater portion of the energy industry operating and capital spend […] With positive industry dynamics, visible cross-selling opportunities and Quanta's support, we believe there is a multiyear opportunity for Stronghold's operations to achieve double digit growth. Stronghold's recurring revenues, accretive operating income margin profile and strong free cash flow generation align well with our strategic imperatives for long-term profitable growth. Stronghold is led by a multigenerational, experienced and well respected management team and, importantly, has a world-class, industry leading safety record. We welcome all of Stronghold's employees to the Quanta family."

Joe Durham, Chief Executive Officer of Stronghold, said: "Quanta is an ideal cultural and strategic fit for Stronghold, and we are excited to join the Quanta family […] Both companies are committed to safety, our employees and our customers, which provide the foundation for success. Joining Quanta will provide significant resources to Stronghold as we look to build on our history of profitable growth and meet the growing needs of our customers in the years ahead."

Stronghold's existing management team will remain in place, with founder Joe Durham continuing in his leadership role as Chief Executive Officer of Stronghold.

Read the article online at: https://www.hydrocarbonengineering.com/refining/24072017/quanta-services-acquires-stronghold/