Quanta (PWR) Up 12% on $2.7B Blattner Buyout Announcement
Quanta Services (PWR) is set to acquire Avon-based utility-scale renewable energy infrastructure solutions provider Blattner.
Quanta Services, Inc. PWR has inked a deal to acquire Blattner Holding Company (Blattner) for $2.7 billion. The transaction is expected to close in fourth-quarter 2021, subject to regulatory approvals and other customary closing conditions.
Post the news release, its shares spiked more than 12% on Sep 2.
Headquartered in Avon, MN, Blattner is one of the largest and leading utility-scale renewable energy infrastructure solution providers in North America. The company — which was established in 1907 — provides front-end engineering, procurement, project management and construction-related services to leading renewable energy developers for wind, solar, and energy storage projects. So far, Blattner has won more than 300 wind projects, 90 solar projects and 17 energy storage projects. It has been generating double-digit organic revenue and profit growth through operational expertise as well as collaborative customer relationships. In 2020, it generated revenues and adjusted EBITDA of approximately $2.4 billion and $291 million, respectively.
Image Source: Zacks Investment Research
The buyout will help Quanta expand presence in large and growing utility-scale renewable energy wind, solar, and energy storage markets. Also, it will enable Quanta to drive renewable generation portfolios in the near and long term, driven by solid energy transition and carbon-neutrality initiatives, increased electrification, supportive public policy, declining levelized costs of renewable energy along with consumer and investor preferences. Also, Blattner will provide Quanta with industry-leading capabilities to meet customer needs.
For 2022, Quanta expects revenues for Blattner between $2.5 billion and $2.7 billion, adjusted EBITDA within $250-$290 million and Blattner's contribution to adjusted earnings per share of $0.80-$1.00.
The company's president and chief executive officer, Duke Austin, said, "We believe what Quanta is to the electric power solutions industry, Blattner is to the utility-scale renewable energy solutions industry. Together, we will be focused on what we believe are the most attractive areas of the electric infrastructure complex. Blattner will bring an exceptional management team that we believe will enhance our ability to collaborate with our customers to shape North America's energy transition to a carbon-neutral economy. Blattner has a strong and visible project backlog, and we believe their financial contribution will be accretive to Quanta's growth, margins, cash flow conversion and earnings per share."
Of the $2.7-billion transaction consideration, approximately $2.36 billion will be paid in cash, subject to a working capital adjustment, and $340 million in shares of Quanta common stock. Additionally, Blattner owners will be eligible for an earnout payment of up to $300 million, subject to the terms of the definitive agreement and certain financial performance targets.
Acquisitions to Boost Backlog
Quanta sees acquisitions as a fundamental component of its strategy of boosting market share and developing incremental backlog. In first-quarter 2021, it acquired a U.S.-based business that primarily provides horizontal directional drilling services for $3.5 million in cash. In 2020, the company acquired seven businesses that primarily serve electric and gas utilities along with communications companies. Quanta invested approximately $400 million in 2020 for strategic acquisitions of seven high-quality companies with great management teams, which enhanced its ability to provide solutions to customers. These are additive to the base business and advanced the company’s strategic initiatives.
Quanta — which shares space with Jacobs Engineering Group Inc. J, KBR, Inc. KBR and AECOM ACM in the same industry — currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative.See Zacks’ Hottest Tech IPOs Now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Quanta Services, Inc. (PWR): Free Stock Analysis Report
AECOM (ACM): Free Stock Analysis Report
KBR, Inc. (KBR): Free Stock Analysis Report
Jacobs Engineering Group Inc. (J): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research