Bird Construction has announced it will acquire Stuart Olson for $96.5 million.
The transaction was unanimously approved by the boards of directors of both companies, is expected to close early in the fourth quarter of 2020, subject to obtaining the required approvals of the Court of Queen’s Bench of Alberta, the Competition Bureau, shareholders, secured bank lenders and unsecured convertible debenture holders of Stuart Olson.
“The combination of our two businesses will create a company with substantially increased breadth and scale, diversified across services, end-markets and geographies,” said Terrance L. McKibbon, president and CEO of Bird Construction.
“In addition to combining two strong, experienced workforces, customers will benefit from a dynamic, integrated suite of construction services. The additional scale, leading technology platform and comprehensive service solution will position the company to deliver sustainable value and continuing dividends to shareholders. The combination of reduced interest expense and operating synergies is expected to generate accretion in operating cash flows and Adjusted Earnings Per Share in the first full-year.”
The combination of Mississauga, Ontario-based Bird Construction and Calgary, Alberta-based Stuart Olson will create a combined workforce of 5,000 people with an established presence in a number of Canadian markets. The combined entity will have a well-balanced portfolio of low to medium risk projects, and the merger is expected to increase diversification across services, end-markets and geographies.
As well, the merger will see a pro forma revenue of about $2.5 billion, with a growing proportion of recurring business.
“After a period of extensive review and consideration of the strategic and financial alternatives reasonably available to Stuart Olson, the board determined that this transaction is in the best interests of Stuart Olson and its shareholders given the current and go forward balance sheet and leverage metrics challenges facing Stuart Olson,” said David LeMay, president and CEO of Stuart Olson.
“We and Bird have a similar history with roots dating back over 100 years in Canada, a shared strategic focus on growth in our respective businesses and strong cultural alignment throughout our organizations. In the face of the challenges currently being experienced by Stuart Olson, including operating under risks related to the COVID-19 pandemic, and the significant economic changes in Canada, it’s a move that renews opportunities for our people, expands new services to our clients and is expected to create long-term value for all our stakeholders.”
Bird Construction plans to finance the transaction through a combination of common shares of Bird and cash, allowing Stuart Olson’s stakeholders receiving shares with the opportunity to participate in the future growth of the combined business.
The $96.5 million price tag will consist of $30 million cash and $66.5 million of the common shares of Bird.
In response to the current economic environment and increased financial and operating pressure, Stuart Olson retained CIBC Capital Markets and TD Securities to assist it as financial advisors and agent in respect of a strategic sales process in April.
The process concluded with the Stuart Olson board recommending the sale to Bird Construction, which was determined to offer Stuart Olson’s shareholders the greatest opportunity to recognize value.