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Tutor Perini Acquires Frontier-Kemper, To Buy Lunda

Construction company Tutor Perini Corp. (TPC), Thursday announced a $113 million acquisition of a tunnel builder, and a Letter of Intent for a $131.8 million acquisition of a bridge and dam builder. The two entities have a combined backlog of $700 million, and fiscal 2010 revenues of close to $550 million.

Tutor Perini acquired 100% ownership of Evansville, Indiana-headquartered Frontier-Kemper Constructors, Inc., for about $61 million in cash and the assumption of about $52 million of debt. At closing, $35 million of the debt was paid off. Frontier-Kemper builds tunnels for highways, railroads, subways and rapid transit systems. Frontier-Kemper employs over 600 people and has current backlog of about $300 million. Revenues in fiscal year 2010 were approximately $148 million.

The transaction was financed by proceeds from Tutor Perini's senior note offering that closed in October 2010. Frontier-Kemper would retain its name and senior management team, with W.D. Rogstad remaining President and CEO.

In the other development, Tutor Perini signed a Letter of Intent or LOI to acquire 100 percent of the stock of Black River Falls, Wisconsin-headquartered Lunda Construction Company. Lunda too has over 600 employees and has a current backlog of about $400 million. Revenues were approximately $400 million in fiscal year 2010. Lunda engages in the construction, rehabilitation and maintenance of bridges, railroads, dams and other civil structures.

The purchase price for Lunda is indicated at $153.5 million, consisting of $131.8 million in cash at closing and $21.7 million in a note payable in five years. Further, a structured earn-out is based on profitability targets for three years following the closing date, which is expected under a month from now.

Lunda too would retain its identity and continue to be managed by its current senior management team, with Larry Lunda remaining President and CEO.

The acquisitions are expected to expand Sylmar, California-headquartered Tutor Perini's reach into Canada and the midwest respectively.

On April 4, Tutor Perini acquired 100 percent of Anderson Companies for $64.6 million in cash, plus an amount to be determined based on Andersons' operating results for 2011-2013. Anderson had backlog of $475 million, fiscal year 2010 revenues of approximately $287 million. Anderson provides general contracting, design-build, preconstruction, and construction management services. Anderson Companies is parent company of Roy Anderson Corporation, Harrell Contracting Group, LLC and Brice Building Company, LLC, with all three retaining their names.

In early May, Tutor Perini estimated earnings for the fiscal year ending in December to be in the range of $2.20 to $2.40 per share, with revenues in the range of $4.2 to $4.7 billion. The Street currently expect earnings of $2.19 per share on revenues of $3.96 billion.

The backlog of uncompleted construction work at March 31, 2011 was $4.2 billion.

TPC closed Thursday's regular trading at $19.42, up $0.18 or 0.94%, on the NYSE.

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