Dallas-based Primoris Services Corp. will expand its utility business with a $470 million cash deal to acquire PLH Group Inc., positioning the company to make more investments in the country’s power grid.
Primoris, a specialist contractor for utility, renewable energy and other energy-related markets, announced the transaction on Monday. Based in Irving, PLH Group is a utility-focused specialty construction company operating in fast-growing regions of the United States
The acquisition nearly doubles Primoris’ Power Delivery business, adds nearly 1,000 employees to its skilled workforce and accelerates the company’s transition to higher-margin master service agreements that generate recurring revenue. Primoris expects the deal to increase earnings per share by more than 10 cents within a year and result in annual cost savings of at least $10 million within two years.
“This acquisition…expands our footprint for power delivery services at a time when the improvement and expansion of our domestic power grid is driving massive capital investments in this market,” Primoris CEO Tom McCormick said in a statement. An estimated $385 billion is projected to be spent through 2025 to modernize power and gas transmission and distribution networks.
McCormick said PLH is also strong in emerging utility markets such as data centers and connections from renewable power generation to the power grid. PLH had revenues of $733 million with pre-tax income of $54 million for the year ended May 31. Almost 80% of the turnover comes from electricity supplies and natural gas suppliers.
Primoris had nearly $3.5 billion in sales last year, making it the 35th largest public company in North Texas.
Peter Sandore, CEO of PLH Group, said the combination will benefit both customers and employees. The company has been owned by private equity firm Energy Capital Partners for about a decade.
“Prioris’ broad service offering allows us to offer new opportunities to our existing clients while continuing to advance our core values of safety, integrity, professionalism and teamwork,” he said. “In addition, the size and expanded footprint of Primoris will give PLH teams access to greater job mobility and diverse employment opportunities in the future.”
Size matters in the power and gas markets, McCormick said.
“Many large utilities are looking to consolidate their supply chains, and having a bigger footprint will make us more competitive when bidding for contracts,” he said on a conference call to discuss the deal.
The transaction is expected to close in the third quarter, subject to regulatory approvals.