Dallas-based Arcosa Inc. (NYSE: ACA) is acquiring Houston-based Cherry Industries Inc. in a $298 million deal, according to a news release.
Cherry, a company that produces natural and recycled aggregates, adds 12 Houston locations to Arcosa’s 19 locations in Texas. Cherry's natural aggregates business includes mining and processing of sand, including processing into stabilized materials by mixing with cement. Its recycled aggregates business includes crushing and recycling concrete to re-use as aggregates.
The transaction will build out Arcosa’s footprint in the Houston area and provide a platform for growth in natural and recycled aggregates.
Arcosa plans to fund the purchase by cash and borrowings available under its credit facility. The transaction is expected to close in the first quarter of 2020.
“The transaction is aligned with our strategic plan, accelerating the growth of our high-value Construction Products segment and enhancing our geographic position within Texas,” Arcosa President and CEO Antonio Carrillo said in the release. “Cherry’s unique platform will provide additional organic and acquisition growth opportunities in Houston and adjacent markets in Texas and the Gulf Coast. Cherry’s unique business model of offering aggregates in combination with recycled aggregates represents an opportunity for Arcosa to replicate in other regions.”
Cherry had revenue of about $176 million for the 12-month period ending Sept. 30. The company was founded in 1952 and offers mines and processing facilities services across the Houston area and offers a variety of construction materials to customers.
“We look forward to working with the Construction Products team to grow our natural and recycled aggregates business in Houston and in new markets,” Cherry President Leonard Cherry said in the release.
Gibson Dunn acted as legal adviser to Arcosa. Stephens Inc. served as financial adviser to Cherry, and Bradley Arant Boult Cummings LLP acted as Cherry's legal adviser.
Arcosa, a provider of infrastructure-related products and solutions, went public about a year ago, after it spun off from railcar-maker Trinity Industries Inc. (NYSE: TRN).
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