TIDMKLR
RNS Number : 1418F
Keller Group PLC
14 July 2021
14 July 2021
Keller Group plc acquires RECON Services, Inc
Keller Group plc ('Keller' or 'the Group'), the world's largest
geotechnical specialist contractor, announces the acquisition of
RECON Services, Inc ('RECON'), a geotechnical and industrial
services company headquartered in Houston, Texas, USA, for an
initial cash consideration of US$23m (GBP17m), and an expected
earn-out of US$15m (GBP11m) relating to certain future contract
wins. The acquisition completed on 13 July 2021 and was not subject
to any regulatory approvals.
RECON is a specialist geotechnical environmental remediation and
industrial services contractor working principally for industrial
clients, many in the petrochemical sector, predominantly along the
Gulf and East coasts of the United States. Its geotechnical work is
focused mainly on the environmental remediation and solidification
of soils, whilst its industrial services activities support the
specialised needs of the power, mining and manufacturing
industries.
The acquisition of RECON is in line with the Group's strategy to
be the preferred international geotechnical specialist contractor
focused on sustainable markets and attractive projects. Similar to
Keller's existing Florida based Moretrench Industrial business,
RECON is focused on environmental remediation activities and the
geographic proximity of the two businesses will provide revenue
synergies from cross selling opportunities, both between the two
businesses and also the Keller Foundations businesses, and some,
primarily volume based, cost synergies. The additional revenue
synergies provide the opportunity to increase the Group's overall
market share in the important Gulf Coast area where Keller has
historically been relatively under-represented. RECON will report
to John Carpenter, President of Moretrench Industrial, and be
integrated into Keller's North America Division.
RECON has been acquired from funds managed by Oaktree Capital
Management, L.P. for an initial cash consideration of US$23m, on a
cash and debt free basis, plus an earn-out consideration relating
to certain future contract wins up to 31 December 2022, which is
currently estimated to be around US$15m, payable at time of project
mobilisation. The acquisition will be funded from Keller's existing
borrowing facilities.
In the period 2015-2019 RECON averaged revenues of cUS$150m
p.a., which reduced to US$87m in the year ended 31 December 2020 as
the business was materially affected by the impact of COVID-19 and
resulted in an operating loss of US$1.6m. As at 31 December 2020,
RECON had gross assets of US$52.0m. We expect RECON's base revenue
for 2021 to be similar to 2020 on an improving trend, and for the
market to have a progressive recovery as the effects of COVID-19
recede and new projects are awarded. Over time, we expect RECON's
operating margins to recover to at least the average margin of the
North America Division.
We expect the acquisition to be earnings accretive in the first
full year of ownership as RECON's revenue begins to return to more
normal levels of activity and as the operational benefits of
integrating the business develop, with the additional potential for
new contract awards given the significant pipeline of new projects
projected by the petrochemical sector in the region.
Michael Speakman, Chief Executive of Keller, said:
"I am excited by the acquisition of RECON, and by the
contribution RECON will make to Keller in the future. RECON's
excellent safety record and strong customer service ethos are very
similar to those of Moretrench Industrial, and together they
significantly broaden our capability in the growing environmental
services sector. This timely acquisition is strategically aligned
to our objective of increasing Keller's market presence in our
chosen local markets, and leveraging the synergy opportunities
available as a consequence of being integrated into the Keller
Group."
For further information, please contact:
Keller Group plc www.keller.com
Michael Speakman, Chief Executive Officer 020 7616 7575
David Burke, Chief Financial Officer
Caroline Crampton, Head of Investor Relations
FTI Consulting
Nick Hasell 020 3727 1340
Matthew O'Keeffe
Notes to editors:
Keller is the world's largest geotechnical specialist contractor
providing a wide portfolio of advanced foundation and ground
improvement techniques used across the entire construction sector.
With around 9,000 staff and operations across five continents,
Keller tackles an unrivalled 6,000 projects every year, generating
annual revenue of more than GBP2bn.
Cautionary statements:
This document contains certain 'forward-looking statements' with
respect to Keller's financial condition, results of operations and
business and certain of Keller's plans and objectives with respect
to these items.
Forward-looking statements are sometimes, but not always,
identified by their use of a date in the future or such words as
'anticipates', 'aims', 'due', 'could', 'may', 'should', 'expects',
'believes', 'intends', 'plans', 'potential', 'reasonably possible',
'targets', 'goal' or 'estimates'. By their very nature forward
looking statements are inherently unpredictable, speculative and
involve risk and uncertainty because they relate to events and
depend on circumstances that will occur in the future. There are a
number of factors that could cause actual results and developments
to differ materially from those expressed or implied by these
forward-looking statements. These factors include, but are not
limited to, changes in the economies and markets in which the Group
operates; changes in the regulatory and competition frameworks in
which the Group operates; the impact of legal or other proceedings
against or which affect the Group; and changes in interest and
exchange rates. For a more detailed description of these risks,
uncertainties and other factors, please see the Principal risks and
uncertainties section of the Strategic report in the Annual Report
and Accounts. All written or verbal forward looking-statements,
made in this document or made subsequently, which are attributable
to Keller or any other member of the Group or persons acting on
their behalf are expressly qualified in their entirety by the
factors referred to above. Keller does not intend to update these
forward-looking statements. Nothing in this document should be
regarded as a profits forecast. This document is not an offer to
sell, exchange or transfer any securities of Keller Group plc or
any of its subsidiaries and is not soliciting an offer to purchase,
exchange or transfer such securities in any jurisdiction.
Securities may not be offered, sold or transferred in the United
States absent registration or an applicable exemption from the
registration requirements of the US Securities Act of 1933 (as
amended).
LEI number: 549300QO4MBL43UHSN10 Classification: 3.1 Additional
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END
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