... MasTec Acquires Henkels & McCoy Group for $600 Million

MasTec Acquires Henkels & McCoy Group for $600 Million

MasTec Inc. has closed its previously announced acquisition of Henkels & McCoy Group Inc. in a cash and stock transaction valued at approximately $600 million.

Henkels is one of the largest U.S. private electrical power transmission and distribution utility services firms and the 5th largest U.S. utility contractor in the recent 2021 Engineering News-Record ranking.

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“We are pleased to officially welcome the more than 5,100 Henkels team members to the MasTec family,” said MasTec CEO Jose Mas in a Dec. 30 statement. “We believe that the addition of Henkels, coupled with MasTec’s existing operations, creates a market leading utility contractor with significant expertise, scale and capacity that can provide a complete and compelling suite of service offerings to our customers as they work to transition to renewable energy generation, modernize power grid systems and reduce carbon emissions.”

Founded in 1923, Henkels has been in operation for more than 98 years, with approximately $1.5 billion in fiscal 2021 revenue, primarily with long tenured relationships across a diverse blue chip customer base, with expansive geographic operations across the United States.

“This marks an important step in the diversification of MasTec’s end market portfolio of services, providing us strong strategic growth opportunities,” Mas added. “We believe the transition to renewable power generation will create significant growth demand across the utility sector. MasTec’s suite of services, from clean energy power generation to our newly expanded power transmission and distribution capacity, positions us for strong growth in this expanding market.”

First announced on Dec. 20, the total transaction consideration will be $600 million, with approximately $420 million in cash (including the repayment of Henkels’ debt) plus approximately 2 million shares of MasTec common stock, subject to customary purchase price adjustments. Cash will be provided by MasTec’s cash on hand, as well as borrowing under its existing unsecured credit facility. MasTec anticipates that post-acquisition leverage metrics will remain comfortably within its target range with ample liquidity.

“As a third generation, family-owned company, we carefully evaluated multiple alternatives for our operations,” said Henkels & McCoy chairman and CEO Rod Henkels. “Our choice of MasTec was based on the strong cultural fit for both our loyal employees and long-term customers. In addition, we believe that MasTec provides significant strategic growth opportunities and, as evidence of our strong belief in the merits of this combination, my brother Paul and I have requested, and will receive, a significant portion of the proceeds of the transaction in MasTec common stock.”

The transaction supports MasTec’s long-term strategy to expand in the fast-growing electric utility services market with incremental recurring master service agreement revenue. While it is expected that significant revenue and operating margin opportunities will materialize from this combination, none of these potential opportunities are included in the current expectation that Henkels’ 2022 results will approximate its fiscal 2021 results at approximately $1.5 billion in revenue and $70 million in adjusted EBITDA. Both actual fiscal 2021 and expected post-acquisition 2022 results reflect impacts of underperforming communications and pipeline services operations, which are anticipated to improve over time.

The transaction was unanimously approved by the Board of Directors of both MasTec and Henkels, as well as Henkels’ shareholders.

Holland & Knight LLP acted as legal counsel to MasTec. Houlihan Lokey served as exclusive financial advisor, and Sidley Austin LLP served as legal counsel, to Henkels.

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