Granite Eyes $565M Buy of Water Sector's Layne Christensen
Aiming to boost market share in growing water-wastewater infrastructure construction—particularly in the energy sector—transportation contractor Granite Construction Inc. is set to close by midyear the purchase of water-management and drilling firm Layne Christensen Co.
The $565-million stock-for-stock deal, including debt, also would aid Layne—which has struggled from mining sector falloff and project execution issues—as it launches a new water venture.
With the U.S. municipal utility sector projected to spend $532 billion through 2025, 50% for water and wastewater distribution, “this acquisition is attractive,” Granite said on Feb. 14.
Layne shareholders will receive 0.27 Granite share for each Layne share owned, equal to a 33% premium over average prices for both firms since last November.
Granite ranks at No. 28 on ENR’s 2017 Top 400 Contractors list, with $2.5 billion in previous-year revenue. Layne, which supplied drilling equipment and experts for the 2010 rescue of 33 Chilean miners trapped underground for 69 days, most recently ranked at No. 106 on ENR’s 2016 list, reporting $664 million in revenue, down from No. 79. The firm already sold some non-water contracting businesses.
Layne recently finished its 26-mile, 100,000-barrel-per-day Hermosa pipeline in Texas that is set to ensure more efficient brackish water supply to oil-and-gas clients there.
The firm owns the $18-million project’s land, water and equipment and functions like a utility, charging customers for use, it told the Houston Chronicle. Neither Granite nor Layne disclosed how their operations will integrate after the expected second-quarter deal close nor did they identify a new role for Layne CEO Michael Callel, who joined the firm in 2015.