MasTec and Infrastructure and Energy Alternatives Inc. (IEA) have entered into a definitive agreement under which MasTec will acquire all of the outstanding shares of IEA in a cash-and-stock transaction valued at $14 per IEA share.
The transaction has been unanimously approved by the boards of directors of both MasTec and IEA.
The acquisition is expected to close late fourth quarter of 2022, subject to IEA stockholder and Hart-Scott-Rodino approvals, regulatory approvals and other customary closing conditions. MasTec has entered into agreements with various IEA stockholders, which collectively own approximately 35% of IEA’s outstanding stock, to vote their shares of IEA common stock in favor of the transaction. Based on estimated IEA net debt levels at closing, the total transaction consideration will be approximately $1.1 billion. MasTec expects to issue approximately 2.8 million MasTec shares in the transaction.
“We are proud to expand our service capabilities, scale and expertise providing critical infrastructure to support the nation’s energy transition to secure and sustainable renewable sources,” says Jose Mas, MasTec’s CEO. “We are excited to welcome JP, the IEA management team and almost 6,000 IEA team members to the MasTec family. We have long admired IEA’s operating excellence, and we have a strong cultural alignment with IEA in safety and customer service.”
Founded in 2011 with roots dating to 1947, IEA is a renewable energy and infrastructure solutions services provider with expertise and capabilities spanning engineering, procurement, construction and other related services. It has completed more than 260 utility-scale wind and solar projects across North America.
“We believe that the addition of IEA’s union based clean energy power generation services, coupled with MasTec and IEA’s combined non-union craft labor capacity, will provide increased scale and capacity needed to meet expected growing customer demand for renewable power generation over the next decade,” continues Mas. “We also believe that MasTec’s existing electrical transmission and distribution service capabilities, coupled with expanded renewable power generation services from the IEA acquisition, will provide a compelling and complete suite of services to support customer’s needs for both power generation and power grid system infrastructure required to transition to renewable energy and reduce carbon emissions.”
Under the terms of the agreement, IEA stockholders will receive $14 per share, comprised of $10.50 per share in cash and 0.0483 of a MasTec share, with a value of $3.50 per share, based on MasTec’s closing share price on July 22, 2022, and represents a 34% premium to IEA’s closing stock price on July 22, 2022.
“The combination with MasTec will create new opportunities for IEA’s employees and our customer base, states JP Roehm, IEA’s president and CEO. “Our joint resources and capabilities will advance our ability to serve our customers in the renewable energy, power delivery and infrastructure markets. We believe that IEA stockholders will benefit from MasTec and IEA’s combined operations and scale, and this belief is reflected in our agreement to receive 25 percent of the transaction proceeds in MasTec common stock. MasTec is the ideal owner for IEA, and I am excited to continue to lead the IEA team during this exciting new chapter of our story.”
IEA is reaffirming its expectation that full year 2022 revenue will range between $2.3 to $2.5 billion, with net income ranging between $45 to $51 million, adjusted EBITDA (a non-GAAP measure) ranging between $140 to $150 million. For 2023, MasTec expects that IEA will generate revenue between $2.6 to $2.7 billion, with adjusted EBITDA ranging between $160 to $170 million, exclusive of any post transaction synergies1. MasTec expects near term post transaction annual cost savings of approximately $10 million primarily from the combination of reduced IEA public company reporting and other costs. Inclusive of both transaction finance costs as well as expected synergies, MasTec expects that IEA will generate approximately $45 to $50 million of adjusted net income (a non-GAAP measure) in 2023.
MasTec has obtained committed bridge financing from Bank of America and J.P. Morgan, should it be needed, to complete the transaction. MasTec, however, intends to pursue certain other debt financing alternatives to finance the cash portion of the transaction consideration.
J.P. Morgan Securities LLC is serving as financial advisor to MasTec, and Fried Frank Harris Shriver & Jacobson LLP and Holland & Knight LLP are serving as legal counsel. Lazard is serving as financial advisor to IEA, and Gibson, Dunn & Crutcher LLP is serving as legal counsel.
