Ontario Construction Report staff writer
Bird Construction Inc. based in Mississauga will acquire Calgary-based construction services company Stuart Olson Inc. in a deal valued at $96.5 million, with most of the purchase price going to debenture holders and lenders.
The combined business would employ about 5,000 people across Canada and generate about $2.5 billion in annual revenue, Bird said in a news release last Wednesday. It also expects $25 million in cost savings by the end of 2021.
Bird will pay a combination of $30 million in cash and $66.5 million worth of common shares valued at $6.32 each.
Some $4 million of the payment will go to Stuart Olsen’s current shareholders.
Canso Investment Counsel Ltd. will facilitate the transaction and acquire Bird shares for $40 million in cash – and end up with 18.8 per cent of Bird’s shares.
The deal, which is subject to shareholder and regulatory approvals, is expected to close by the end of the year.
“The combination of our two businesses will create a company with substantially increased breadth and scale, diversified across services, end-markets and geographies,” Terrance L. McKibbon, president and CEO of Bird, said in a statement. “In addition to combining two strong, experienced workforces, customers will benefit from a dynamic, integrated suite of construction services.
“The additional scale, leading technology platform and comprehensive service solution will position the company to deliver sustainable value and continuing dividends to shareholders. The combination of reduced interest expense and operating synergies is expected to generate accretion in operating cash flows and Adjusted Earnings Per Share in the first full-year,” McKibbon said.
“After a period of extensive review and consideration of the strategic and financial alternatives reasonably available to Stuart Olson, the Board determined that this transaction is in the best interests of Stuart Olson and its shareholders given the current and go forward balance sheet and leverage metrics challenges facing Stuart Olson,” said Stuart Olson’s president and CEO David LeMay.
“We and Bird have a similar history with roots dating back over 100 years in Canada, a shared strategic focus on growth in our respective businesses and strong cultural alignment throughout our organizations,” LeMay said.
“In the face of the challenges currently being experienced by Stuart Olson, including operating under risks related to the COVID-19 pandemic, and the significant economic changes in Canada, it’s a move that renews opportunities for our people, expands new services to our clients and is expected to create long-term value for all our stakeholders.”