Infrastructure associated products and solutions provider Arcosa, Inc. has signed a definitive agreement to acquire StonePoint Ultimate Holding for a total cash consideration of $375 million. The transaction is expected to close in April 2021.
Arcosa (ACA) President and Chief Executive Officer, Antonio Carrillo said, “StonePoint represents an outstanding strategic fit for Arcosa. The transaction aligns with Arcosa’s strategy to expand our Aggregates business in our current footprint and to enter new, attractive geographies.”
StonePoint CEO Colin Oerton said, “Arcosa will be an excellent long-term owner of the StonePoint platform and will be able to further accelerate the growth of the business.”
The acquisition is expected to be accretive to Arcosa’s bottom line in 2021 and it plans to fund the transaction with a combination of cash and borrowings from its $500 million credit facility. It expects to refinance the borrowings with long term debt.
On the back of operating synergies and a recovery in the construction market, StonePoint is expected to generate adjusted EBITDA of $30 million in 2021 and $33 million by 2022.
Furthermore, about 80% of StonePoint’s EBITDA comes from aggregates with the remainder coming from asphalt and other services. (See Arcosa stock analysis on TipRanks)
On March 22, Oppenheimer analyst Ian Zaffino reiterated a Buy rating on the stock and raised the price target to $70 (16.8% upside potential) from $60. Commenting on the StonePoint acquisition, Zaffino said, “The acquisition complements ACA’s existing aggregates/materials exposure, strengthens its footprint in Texas and Louisiana and expands its geographic reach into new markets, including Tennessee, Kentucky, Pennsylvania, and West Virginia.”
The other analyst covering the stock, Sidoti’s Julio Romero has a Hold rating on the stock with a price target of $57. The two ratings combine to a Moderate Buy consensus rating and an average analyst price target of $63.50 (6% upside potential). Shares have rallied about 96% over the past year.
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