MasTec and Infrastructure and Energy Alternatives Inc. have reached a definitive agreement. MasTec will acquire all outstanding shares of IEA through a cash-and stock transaction, valued at $14 per IEA Share. Both MasTec and IEA have unanimously approved the transaction.
The acquisition is expected close in the fourth quarter of 2022. This is subject to IEA stockholder approvals and Hart-ScottRodino approvals. MasTec has entered into agreements with various IEA stockholders, which collectively own approximately 35% of IEA’s outstanding stock, to vote their shares of IEA common stock in favor of the transaction. Based on estimated IEA net borrowing levels at closing, the total transaction consideration is approximately $1.1 million. MasTec anticipates issuing approximately 2.8 Million MasTec shares as part of the transaction.
“We are proud to expand our service capabilities, scale and expertise providing critical infrastructure to support the nation’s energy transition to secure and sustainable renewable sources,” says Jose Mas, MasTec’s CEO. “We are excited to welcome JP, the IEA management team and almost 6,000 IEA team members to the MasTec family. We have long admired IEA’s operating excellence, and we have a strong cultural alignment with IEA in safety and customer service.”
Founded in 2011, IEA was founded with roots dating back to 1947. They are a provider of infrastructure and renewable energy solutions services. Their expertise spans engineering, procurement, construction, and other related services. It has completed more that 260 utility-scale solar and wind projects in North America.
“We believe that the addition of IEA’s union based clean energy power generation services, coupled with MasTec and IEA’s combined non-union craft labor capacity, will provide increased scale and capacity needed to meet expected growing customer demand for renewable power generation over the next decade,” continues Mas. “We also believe that MasTec’s existing electrical transmission and distribution service capabilities, coupled with expanded renewable power generation services from the IEA acquisition, will provide a compelling and complete suite of services to support customer’s needs for both power generation and power grid system infrastructure required to transition to renewable energy and reduce carbon emissions.”
Under the terms of the agreement, IEA stockholders will receive $14 per share, comprised of $10.50 per share in cash and 0.0483 of a MasTec share, with a value of $3.50 per share, based on MasTec’s closing share price on July 22, 2022, and represents a 34% premium to IEA’s closing stock price on July 22, 2022.
“The combination with MasTec will create new opportunities for IEA’s employees and our customer base, states JP Roehm, IEA’s president and CEO. “Our joint resources and capabilities will advance our ability to serve our customers in the renewable energy, power delivery and infrastructure markets. We believe that IEA stockholders will benefit from MasTec and IEA’s combined operations and scale, and this belief is reflected in our agreement to receive 25 percent of the transaction proceeds in MasTec common stock. MasTec is the ideal owner for IEA, and I am excited to continue to lead the IEA team during this exciting new chapter of our story.”
IEA reiterates its expectation that 2022’s full-year revenue will be between $2.3 and $2.5 billion. Net income will range from $45 to $51million, while adjusted EBITDA (a non GAAP measure) will range between $140 to $150 millions. MasTec projects that IEA’s revenue will be between $2.6 billion and $2.7billion in 2023. The adjusted EBITDA will be between $160 million to $170million, excluding any transaction synergies. MasTec expects to save approximately $10 million in near term annual costs after a transaction. This is primarily due to the combination of lower IEA public companies reporting and other expenses. MasTec estimates that IEA will generate between $45 and $50 million in adjusted net income (a non GAAP measure) by 2023, taking into account both transaction finance costs and expected synergies.
MasTec has secured committed bridge financing from J.P. Morgan and Bank of America to help complete the transaction. MasTec intends to seek other forms of debt financing to finance the cash component of the transaction consideration.
J.P. Morgan Securities LLC is serving as financial advisor to MasTec, and Fried Frank Harris Shriver & Jacobson LLP and Holland & Knight LLP are serving as legal counsel. Lazard is serving as financial advisor to IEA, and Gibson, Dunn & Crutcher LLP is serving as legal counsel.