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Firms Plan Industrial Services Giant

Wednesday, September 18, 2013

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Diversified global industrial company Harsco Corp. has announced the $300 million sale of its Infrastructure division into a $3 billion joint venture that will combine the business with Brand Energy & Infrastructure Services Inc.

Under the multilayered transaction, announced Monday (Sept. 16), Harsco's infrastructure division will be sold to Clayton, Dubilier & Rice (CDR), a private investment firm that is simultaneously acquiring the Brand business from First Reserve. The two infrastructure units will be combined into a new company that will continue under the name Brand Energy & Infrastructure Services.

BEIS
Brand Energy & Infrastructure Services

Brand's services include industrial coatings application and abrasive blasting. The combined company expects about $2 billion in maintenance revenue in its first year.

The new company "will be a leading, single-source provider of specialized industrial services to the worldwide energy and infrastructure sectors," the parties said.

Harsco will receive $300 million in cash from the sale and a 29 percent equity stake in the combined company. The transaction is expected to be completed in the fourth quarter of 2013.

'Strategic Transformation'

Infrastructure, one of four Harsco divisions, specializes in construction services and industrial maintenance services. The company provides scaffolding, access, formwork, shoring and site safety services to the construction sector. It offers painting, blasting, cleaning, insulation and other products and services to the industrial maintenance market.

The Camp Hill, PA-based company also operates Harsco Metals & Minerals, Harsco Rail and Harsco Industrial, with more than 400 locations in 50 countries.

Harsco President and Chief Executive Officer Patrick Decker called the Infrastructure division sale and merger "the first major step in the strategic transformation of Harsco."

Focus on Metals & Minerals

The decision "follows a period of extensive consideration and offers a number of compelling benefits to our shareholders," said Decker. He said the deal would:

  • Strengthen Harsco's financial profile;
  • Streamline and simplify its business; and
  • Give Harsco an equity position in a valuable new venture.
Harsco
Harsco Corp.

Selling its infrastructure business will allow Harsco Corp. to focus on other segments, including Metals & Minerals, which manufactures abrasives. Harsco will maintain an equity stake in the newly combined industrial services company.

Specifically, Harsco said it would be focusing more on its Metals & Minerals segment, the abrasives maker whose products include Black Beauty. The Metals & Minerals business has been rapidly expanding recently, with the acquisition of a crushed-glass manufacturing operation and a network of new warehouses.

The New Brand: Focus on Maintenance

Atlanta, GA-based Brand Energy and Infrastructure Services is a leading provider of specialty services to North America’s energy markets. Its extensive portfolio includes scaffolding, coatings, insulation, refractory, forming and shoring, cathodic protection, mechanical services and other related crafts.

The company also serves the infrastructure and commercial markets throughout North America and in strategic international regions. Brand operates in five key market segments: Upstream/Midstream, Downstream, Power Generation, Industrial and Infrastructure

BEIS
Brand Energy & Infrastructure Services

Brand provides industrial services to North America's energy markets.

Annual revenues for the combined company are estimated at nearly $3 billion. About two-thirds of that is expected to come from the energy sector, "with a significant level of recurring revenue driven by required maintenance work," the company said.

“We are excited to help build a global leader in both specialized industrial services and infrastructure services,” said Nathan K. Sleeper, a CD&R Partner.

Added Wood: “The integration with Harsco Infrastructure directly aligns with our company's strategy to expand our specialty service offering. The combination of these two groups of strong local operating companies and management teams creates a true global leader in both specialized industrial services and forming and shoring."

   

Tagged categories: Abrasives; Acquisitions; Brand Energy & Infrastructure Services (BEIS); Business operations; Infrastructure; Maintenance coating work; Maintenance programs; Mergers

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