Trinity Industries, Inc. (NYSE: TRN) today announced that it has entered
into an agreement to acquire the assets of Meyer Steel Structures
(“Meyer”), the utility steel structures division of Thomas & Betts
Corporation, a member of the ABB Group, for a purchase price of
approximately $600 million. The transaction is subject to customary
regulatory approvals and is expected to close during the third quarter.
Trinity expects to fund the purchase price with available cash on hand.
Trinity has been focused on identifying market-leading companies in
the energy and infrastructure markets that diversify its portfolio of
businesses, enhance its operating flexibility, reduce the cyclicality
of earnings, and generate stable cash flow. The acquisition of Meyer
achieves many of these high-level objectives.
The acquisition of Meyer broadens Trinity’s product portfolio and
establishes a market-leading position in the North American electric
utility steel structures market.
The timing of the transaction aligns well for all parties involved.
Trinity desires to expand its market presence in a business it has
been developing over the last several years, at a time when ABB Group
is divesting Meyer due to limited synergies with its core portfolio.
The employees and customers of Meyer will benefit from the focus and
investment of Trinity.
Trinity categorizes its portfolio of companies into a number of
different types, including primary, support, and niche businesses.
Trinity views Meyer as a “primary” business, establishing a new
platform with various opportunities to expand.
Meyer’s strong engineering and manufacturing capabilities and products
with high steel content align well with Trinity’s existing
competencies and offer enrichment opportunities to create additional
Established over 85 years ago, Meyer is one of North America’s leading
providers of tubular steel structures for electricity transmission and
distribution. Meyer’s products include engineered poles, H-frames, light
duty poles and substation structures, provided to customers with
integrated design, engineering, manufacturing, and delivery. With
headquarters in Memphis, TN, Meyer employs more than 1,100 people and
has manufacturing facilities in Alabama, South Carolina, Texas, and
Wisconsin. On a stand-alone basis, Meyer is expected to record full-year
2014 revenues of approximately $325 million. Trinity will report revenue
and earnings from Meyer upon completion of the transaction, and its
operating results will be included in Trinity’s Energy Equipment Group.
“We are excited about the opportunities associated with our agreement to
purchase the assets of Meyer Steel Structures,” said Timothy R. Wallace,
Trinity’s Chairman, CEO, and President. “Meyer has an excellent
reputation as a high quality manufacturer of utility steel structures.
Trinity entered the market several years ago, and we have continued to
invest additional resources in this area of our business. With the
acquisition of Meyer, Trinity builds a leadership position in the
electric transmission and distribution industry and confirms its
long-term commitment to the utility steel structures business.”
Mr. Wallace added, “Meyer will fit very well within our portfolio of
companies and supports our vision of being a premier, diversified
industrial company. We are confident its addition will create enrichment
opportunities that benefit our enterprise. Opportunities to acquire
companies with a market-leading reputation and set of competencies like
Meyer’s do not surface often. We look forward to having the employees of
Meyer join the Trinity team.”
“We have admired the leadership position of Meyer Steel Structures for
many years,” said William A. McWhirter II, Trinity Industries, Inc.
Senior Vice President and Construction, Energy, and Inland Barge Group
President. “Culturally, Meyer fits very well with what Trinity values
most: strong leadership, engineering innovation, and continuous
operational improvements. This transaction strengthens Trinity’s
position as a market-leading manufacturer of products that supply North
America’s energy and infrastructure needs.”
Trinity expects the transaction will be accretive to full-year 2014
earnings but cannot provide a range of earnings guidance until the
transaction is completed and purchase price accounting entries are
J.P. Morgan Securities LLC served as financial adviser and K&L Gates
acted as legal counsel for Trinity.
The following section provides transaction details
and additional clarification in a “Question and Answer” format:
Q1)How does the acquisition of Meyer fit into Trinity’s
corporate vision of being a premier, diversified industrial company?
Q2)What enrichment opportunities do you anticipate with the
acquisition of Meyer?
One of Trinity’s core competencies is fabricating products that have a
high steel content, making Meyer’s products an excellent fit.
A large percentage of Meyer’s products are galvanized, and Trinity has
a great deal of expertise and competency in galvanizing.
Trinity currently owns a leading, Mexican-based manufacturer of
lattice towers which is not a product focus of Meyer’s. Over the next
decade, Mexico is expected to continue development and expansion of
its electric transmission and distribution infrastructure, and the
combination of Meyer with Trinity’s existing capabilities favorably
positions it to support this growth.
Transportation and logistics are an important component in the
delivery of electric transmission and distribution products, and
Trinity’s existing logistics expertise and infrastructure will add
value to the process.
Trinity’s market-leading presence in the structural wind towers
industry aligns well with this business as wind farm developments
drive the need for additional electric transmission and distribution
The acquisition of Meyer’s four manufacturing facilities may
potentially add to Trinity’s overall manufacturing flexibility.
Q3)What are the key demand drivers supporting electric
transmission and distribution infrastructure investment?
Reliability – grids must meet the electricity needs of end-users at
all times. Recent concerns over grid vulnerability have heightened
focus on this issue.
Renewable Interconnects – existing regional grids will need connection
to new renewable energy projects, typically solar, wind, biomass, or
new run-of-river hydro projects.
Economics/Congestion – desire to relieve congestion or capacity
constraints, especially in areas of rapid economic growth.
Other – includes increased government regulation and oversight.
Q4)Does this acquisition consume the capital Trinity has
allocated to acquisitions in 2014?
Trinity will continue seeking opportunities to grow its portfolio of
Trinity’s liquidity position, which totaled approximately $1.5 billion
at the end of the first quarter, is very solid and can support
additional investment opportunities.
Trinity’s balance sheet is well-positioned for further growth, cash
flow is solid, and access to external capital is currently available
to support additional growth opportunities to add shareholder value.
Q5)Is the acquisition accretive to earnings?
There are certain purchase price accounting adjustments that will be
made post-closing, including a fair market valuation of inventory,
property, plant, and equipment, identifiable intangible assets, and
goodwill. Certain of these items will impact the ultimate earnings
gained from this acquisition.
There are also one-time, transaction-related costs that will be
recorded in 2014.
The acquisition is expected to be accretive to full-year 2014 earnings.
Meyer’s results are expected to be incorporated in the revenue and
operating profit guidance for the Energy Equipment Group when the
Company provides its outlook for 2015.
Q6)When is the transaction expected to close?
The parties are in the process of filing the transaction with the
appropriate regulatory agencies.
At this time, the closing is expected to be completed during the third
Q7)Do you expect to maintain Meyer’s headquarters in Memphis,
Trinity plans to maintain Meyer’s headquarters in Memphis.
Trinity Industries, Inc., headquartered in Dallas, Texas, is a
diversified industrial company that owns market-leading businesses which
provide products and services to the energy, transportation, chemical,
and construction sectors. Trinity reports its financial results in five
principal business segments: the Rail Group, the Railcar Leasing and
Management Services Group, the Inland Barge Group, the Construction
Products Group, and the Energy Equipment Group. For more information,
Some statements in this release, which are not historical facts, are
“forward-looking statements” as defined by the Private Securities
Litigation Reform Act of 1995. Forward-looking statements include
statements about Trinity's estimates, expectations, beliefs, intentions
or strategies for the future, and the assumptions underlying these
forward-looking statements. Trinity uses the words “anticipates,”
“believes,” “estimates,” “expects,” “intends,” “forecasts,” “may,”
“will,” “should,” “guidance,” and similar expressions to identify these
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from
historical experience or our present expectations. For a discussion of
such risks and uncertainties, which could cause actual results to differ
from those contained in the forward-looking statements, see “Risk
Factors” and “Forward-Looking Statements” in the Company's Annual Report
on Form 10-K for the most recent fiscal year.
Trinity Industries, Inc.
Vice President, Finance and Treasurer
Jack Todd, 214-589-8909
Source: Trinity Industries, Inc.