Florida-based specialty contractor giant MasTec Inc. has agreed to acquire electrical power transmission and distribution utility services firm Henkels & McCoy in a $600-million deal. During a conference call to investors, CEO Jose Mas said the acquisition is the largest in company history and comes at the “right time” to continue expanding its non-oil and gas pipeline services.

According to Mas, MasTec’s power transmission and distribution business is expected to account for about 25% of its 2022 revenue after the transaction, with its fossil fuel pipeline and related segment making up just under 20%.

MasTec ranked third on ENR’s 2021 Top 600 Specialty Contractors list, reporting $6.3 billion in 2020 revenue.

“This transaction will double our transmission and distribution resources, expanding our presence in the Northeast markets and the Northwest, where MasTec has traditionally been underrepresented,” Mas said. “More importantly, we are adding significant additional crew and equipment resource capacity.” MasTec will gain 5,100 employees from Henkels & McCoy.

The purchase "repositions MasTec's portfolio to markets that offer potentially greater secular growth opportunities," said Jamie Cook, lead construction sector analyst at Credit Suisse, contending that the addition would help push it "achieve its $10 billion revenue target in 2022."

Earlier this year, MasTec acquired energy infrastructure company Intren LLC, in a deal that expanded the company's electrical distribution operations.

In a statement to ENR, J. Marc Lewis, vice president of investor relations, noted end markets, which currently include power delivery services (electric/ gas T&D), clean energy and infrastructure, telecommunications and pipeline services.

Lewis said a combination of "lower production, supply chain and governmental permitting issues" slowed the company's expected pipeline services in 2022. Meanwhile the energy transition has increased a need for the company's transmission and distribution services as MasTec customers transition to renewable power generation and modernizing power grids, "providing MasTec strong consolidated growth potential."

Henkels & McCoy, ranked No. 14 on ENR’s Top 600 List, reported $1.65 billion in revenue last year. Outlined in its transaction agreement with MasTec, the firm's 2022 results are estimated to be about equal to its projected 2021 revenue at $1.5 billion, with adjusted EBITDA at $70 million.

The numbers reportedly reflect the firm's low performing communications and pipeline services business segments, which are "expected to improve over time," according to MasTec. Henkel's deal with MasTec also includes repayment of its debts and 2 million shares of MasTec common stock. 

"As a third generation, family-owned company, we carefully evaluated multiple alternatives for our operations," said Henkels & McCoy Chairman and CEO Rod Henkels in a statement, noting the deal was based on "strong cultural fit"  and "significant strategic growth opportunities."

The firms did not disclose his corporate title within MasTec after the deal close, but said the firm would become a wholly-owned subsidiary/..

Kevin Gausch, director of lean construction at Henkels & McCoy previously told ENR that the company's investment in technology has been a "game-changer" for its collaborative operations. "The goal is to improve our plan reliability and gain efficiency throughout the project through a continuous feedback loop and process improvement," he explained. 

Henkels & McCoy was recently ordered to provide 362 current and former workers in five states about $1.1 million in back pay and damages for allegedly not paying required overtime wages, according to a lawsuit filed in 2020 by the U.S. Dept.of Labor.