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AZZ To Buy Aquilex SRO For $250 Mln

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2/25/2013 10:04 AM ET

Electrical equipment maker AZZ Inc. (AZZ: Quote) said Monday that it has agreed to acquire Aquilex Specialty Repair and Overhaul, LLC from Aquilex Holdings LLC for $250 million in cash. Aquilex Holdings is majority owned by affiliates of New York-based private investment firm Centerbridge Partners, L.P.

Norcross, Georgia-based Aquilex SRO is a provider of maintenance, repair and revitalization services to the nuclear and fossil fuel power generation markets as well as the refining and industrial markets. The company operates from facilities located in St. Petersburg, Florida, Edmonton Alberta in Canada, Radom in Poland, Hellevoetsluis in Netherlands, and Sao Paulo in Brazil.

The acquisition of Aquilex SRO is part of AZZ's strategy to expand its offerings in the electrical and industrial products segment and also to bolster the company's presence in its primary served markets.

Aquilex SRO is marketed under the trade names of Aquilex SRO, WSI and SMS. The existing senior management team of Aquilex SRO will join the AZZ leadership team. However, Aquilex HydroChem LLC is not part of this transaction.

David Dingus, president and chief executive officer of AZZ said, "Aquilex SRO is a great addition to AZZ's outstanding portfolio of brands and will be part of the Electrical and Industrial Products Segment. As with our recent acquisition of Nuclear Logistics Incorporated, it provides us with a recurring revenue stream during the full life cycle of a nuclear power generation plant, a fossil fuel plant, a waste-to-energy plant, a refinery or other industrial complex."

Founded in 1978 to provide machine welding services for nuclear units and nuclear plant maintenance, Aquilex SRO has expanded its service offerings to the nuclear, fossil, waste to energy, refining, chemical processing, pulp and paper and general industrial markets.

AZZ said it will fund the acquisition using cash on hand and through a new bank credit agreement, which may be inked by the company simultaneously with the closing of the acquisition. The company expects the transaction to close within approximately 30 days. The company added that the transaction value of $250 million will be adjusted for changes in working capital at the time of closing.

For the first year following the acquisition, AZZ forecasts Aquilex revenues in a range of $225 million to $250 million. The company believes the acquisition would be accretive for the first twelve months of ownership of about $0.25 to $0.30 per share, after accounting for some $5 million deal transaction cost that would be written off in the first year of operation.

During the second full year of ownership, AZZ expects the accretion to add $0.50 to $0.60 per share. The company expects to update fiscal year 2014 as part of its fiscal 2013 final earnings announcement and conference call on April 5, 2013.

In Monday's regular session, AZZ is trading at $43.36, up $1.64 or 3.93 percent on a volume of 2,400 shares.

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by RTT Staff Writer

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