Primoris Services Corporation (NASDAQ Global Select: PRIM) ("Primoris" or "Company") today announced that it has signed a definitive agreement to acquire Q3 Contracting Inc. (“Q3”), with an expected closing date of November 17th. Based in Little Canada, Minnesota, just north of St. Paul, Q3 specializes in small diameter pipeline and gas distribution construction.
For the year ended December 31, 2011, Q3 generated operating income of $8.9 million on revenues of $84 million.
Total consideration consists of two parts: a $48.1 million cash payment at closing and incentive provisions that are based on Q3 achieving the following financial targets (using EBITDA as that term is defined in the purchase agreement):
For the period November 18, 2012 through December 31, 2013, a cash payment of $3.75 million if EBITDA is at least $17.7 million with an additional cash payment of $1.25 million if EBITDA exceeds $19.7 million, and
For the calendar year 2014, a cash payment of $3.75 million if EBITDA exceeds $19 million with an additional cash payment of $1.25 million if EBITDA exceeds $22 million.
Brian Pratt, Primoris Chairman, President and CEO, commented, “The acquisition of Q3 continues to broaden our national presence in pipeline construction, replacement and integrity work. Driven by utility growth, normal replacement cycles, environmental and safety regulations, we see long term opportunities in these markets as well as those in our legacy geographies. We are pleased to have Jay Osborn and his team of nearly 700 employees join Primoris in servicing these growing markets.”
Q3 serves a variety of investor-owned utilities in Minnesota, Iowa, Wisconsin, Missouri, South Dakota, North Dakota, Illinois, Nebraska, Ohio and Colorado, with a smaller concentration of municipal customers. Its primary lines of business include remediation and replacement of existing gas distribution lines for local distribution companies and pipeline-associated restoration work. This work is performed largely under Master Service Agreements and is similar to that performed by ARB's underground group in California.
Source: Business Wire
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