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Primoris Services to Acquire Utility-Focused Contractor PLH Group in USD 470m Cash Deal
Monday 27 June 2022

US-based specialty contractor Primoris Services Corp. (NASDAQ Global Select: PRIM) has entered into a definitive merger agreement to acquire PLH Group, Inc. in an all-cash transaction valued at USD 470m, the company said.

Primoris, a specialty contractor in the US, provides critical infrastructure services to the utility, renewables and other related energy markets.

The company's strategic focus on utility markets includes Power Delivery, Communications, and Gas Utilities.

PLH Group is a utility-focused specialty construction company with concentration in key fast-growing regions of the US Both companies are headquartered in the Dallas-Fort Worth metroplex.

The deal nearly doubles Power Delivery business and increases the company's Utilities segment to over 50% of pro forma revenue.

Primoris said it expects annual cost savings of at least USD 10m from cost initiatives within 24 months after the close of the transaction

Pro forma for the transaction Primoris net leverage of approximately 3.3x net debt to adjusted EBITDA for the last 12 months with targeted de-levering to 2.0x by 2024

For the 12 months ended May 31, 2022, PLH generated total revenue of USD 733m and total adjusted earnings before income tax, depreciation and amortization of USD 54m.

Approximately 80% of PLH revenue is associated with Power Delivery and Gas Utility end markets for the 12 months ended December 31, 2021.

With a high proportion of PLH revenue based on master service agreements and unit price contracts, the transaction also maintains Primoris' strategic emphasis on limiting contract risk.

On a pro forma basis, MSA contracts will increase from 46% of total revenue to 48% of total revenue.

The transaction has been unanimously approved by the boards of directors of both Primoris and PLH Group and is expected to close in 3Q22.

The transaction is dependent on the receipt of regulatory approvals and other customary closing conditions.

Primoris will acquire PLH Group for a purchase price of USD 470m, funded through borrowings under our existing credit agreement. Certain members of our existing lender group have committed to provide USD 425m of incremental term loans.

Pro forma for the transaction, Primoris' net leverage will be approximately 3.3x net debt to adjusted EBITDA, based on estimated Primoris net debt as of June 30, 2022, and Primoris LTM adjusted EBITDA as of March 31, 2022 combined with PLH LTM adjusted EBITDA as of May 31, 2022.

Following the close of the transaction, Primoris targets net leverage of 2.0x by 2024.

UBS Investment Bank served as the exclusive financial advisor to Primoris. Gibson, Dunn and Crutcher LLP served as the company's legal counsel. Stifel, Nicolaus and Company served as the exclusive financial advisor to PLH Group. K and L Gates LLP served as PLH Group's legal counsel.

Primoris Services is a specialty contractor providing critical infrastructure services to the utility, energy/renewables and pipeline services markets throughout the United States and Canada.

The company supports a base of customers with engineering, procurement, construction and maintenance services.
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Date Published: 27/06/2022

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