The transaction will combine Harsco’s infrastructure division with Brand Energy & Infrastructure Services, which CD&R is simultaneously acquiring from First Reserve.
The combined company, which will continue under the name Brand Energy & Infrastructure Services, will be a single-source provider of specialised services to the energy and infrastructure sectors worldwide.
Harsco Infrastructure includes SGB, the long-established UK scaffolding business that was once part of John Mowlem.
Harsco will receive cash proceeds of approximately US$300m and a 29% equity stake in the combined company. Annual revenues for the combined company are estimated at nearly $3bn.
“This transaction is the first major step in the strategic transformation of Harsco,” said Patrick Decker, Harsco president and chief executive officer. “It follows a period of extensive consideration and offers a number of compelling benefits to our shareholders. First, it immediately strengthens the financial profile of the company while providing the financial flexibility to pursue higher return, higher growth opportunities. Second, it reduces the complexity of our business, consistent with our objectives for internal simplification and greater operating efficiency. Third, by maintaining an equity position in a stronger and more profitable combined business, Harsco stands to benefit from the additional value that will be created by the new venture.”
Approximately two-thirds of the combined company’s revenues are expected to be generated from the energy sector, with a significant level of recurring revenue driven by required maintenance work.
Paul Wood, current chairman and chief executive officer of Brand, will continue to serve in this role in the combined company. “The integration with Harsco Infrastructure directly aligns with our company's strategy to expand our specialty service offering,” he said. “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 & shoring. The resulting global footprint will enable us to offer best in class operating capabilities to our customers in the growing energy and infrastructure markets.”
The board of directors will include representatives from CD&R, Brand and Harsco. The new company will be headquartered in suburban Atlanta, Georgia, the current headquarters of Brand.
“We are excited to help build a global leader in both specialised industrial services and infrastructure services,” said Nathan Sleeper, a CD&R partner. “We believe that the combined company has a well-positioned global platform, very favorable growth prospects and a deep set of capabilities to serve customers across its diverse end markets.”