Insituform Technologies, Inc. (“Insituform” or the “Company”) (Nasdaq Global Select Market: INSU) today announced the execution of a definitive agreement to acquire the North American business of Fyfe Group, LLC for a purchase price of $115.8 million. The Company also was granted an option to acquire Fyfe Group’s Asian, European and Latin American operations. The Company expects to close the North American acquisition by August 31, 2011.
Fyfe Group, based in San Diego, California, is a pioneer and industry leader in the development, manufacture and installation of fiber reinforced polymer (FRP) systems for the structural repair, strengthening and restoration of pipelines (oil, gas, water and wastewater), buildings (commercial, Federal, municipal, residential and parking garages), bridges and tunnels, and waterfront structures. Lead by founder and Chairman, Ed Fyfe, and Chief Executive Officer, Heath Carr, Fyfe Group has a comprehensive portfolio of patented and other proprietary technologies and products, including its Tyfo® Fibrwrap® System, the only carbon fiber solution on the market meeting 2009 International Building Code requirements. Fyfe Group’s product and service offering also includes pipeline rehabilitation, concrete repair, epoxy injection, corrosion mitigation and specialty coatings services. For 2010, Fyfe Group had North American revenues and EBITDA of approximately $45.1 million and $10.4 million, respectively.
Joe Burgess, President and Chief Executive Officer of Insituform, stated, “The current addressable market for FRP composites for construction rehabilitation projects in the United States is approximately $650 million. We believe that this market will grow to more than $1.4 billion by 2016. Fyfe Group, through its existing proprietary technologies and based on its exemplary record of development and innovation of FRP products and solutions for this market, is well positioned to capture high value growth as FRP composite technologies gain further acceptance in high growth infrastructure markets.”
Burgess further stated, “Insituform’s acquisition of Fyfe Group will complement Insituform’s existing pipe protection capabilities, create cross-selling opportunities, increase the global market opportunity of Insituform’s existing business, and diversify the Company’s presence across end-markets. This acquisition also provides a unique opportunity for us to expand our business beyond pipelines, building upon our experience in protecting valuable infrastructure assets. We are excited how Fyfe Group’s business fits together with our existing platform.”
Commenting on the acquisition, Ed Fyfe, Chairman of Fyfe Group, said, "We are excited about working with Insituform. This transaction provides a unique opportunity to offer complementary products and services to a broader set of customers globally. Fyfe’s history of innovation, technological development and leadership mirrors Insituform’s.”
Heath Carr, Chief Executive Officer of Fyfe Group, stated, “The combined company will provide a product and service offering for the strengthening, protection and rehabilitation of valuable infrastructure assets that will rival any competitor. Insituform is perfectly positioned to help Fyfe Group achieve its growth objectives. The entire Fyfe team is excited about this relationship.”
Fyfe Group’s senior management team, including Ed Fyfe and Heath Carr, will remain with the company and be responsible for its day-to-day operations, growth and continued technological innovation following the closing.
Under the definitive agreement, Fyfe Group granted Insituform an option for a period of one year after the closing of the North America acquisition to acquire Fyfe Group’s international operations in Asia, Europe and Latin America at a purchase price to be negotiated by the parties at the time of exercise. For 2010, Fyfe Group’s international operations (excluding Canada) had revenues and an EBITDA margin of approximately $20 million and 20%, respectively. Subject to due diligence and discussions with Fyfe Group’s international partners, Insituform anticipates that the acquisition of Fyfe Group’s international operations would close prior to year end.
Insituform expects the Fyfe Group North American transaction to be accretive to earnings in 2011 and 2012 (before acquisition transaction expenses).
The consummation of the North American acquisition is subject to customary conditions, including the availability of financing. Insituform is working with its lead banks, Bank of America, N.A. and JPMorgan Chase Bank, N.A., to put in place a new $450 million senior credit facility that would provide the required financing.
In addition, the Company anticipates that it would redeem its $65.0 million, 6.54% Senior Notes, due April 2013, in connection with the closing of the North American transaction. The proceeds for the redemption of the Senior Notes, including any associated make-whole payment (approximately $6.0 million as of June 30, 2011), would be borrowed against the Company’s new senior credit facility.
About Insituform Technologies, Inc.
Insituform Technologies, Inc. is a global leader in pipeline protection. Insituform provides proprietary technologies and services for rehabilitating sewer, water, energy and mining piping systems and the corrosion protection of industrial pipelines. More information about the Company can be found on its internet site at www.insituform.com.
About Fyfe Group, LLC
Fyfe Group has been a pioneer in adapting FRP composites for use in the construction rehabilitation sector including structural repair and reinforcements for buildings, corrosion wrapping for waterfront structures, seismic bracing for structures, leak protection for large diameter pipelines and blast protection for commercial and government properties. Fiber reinforced polymer systems use fibers (carbon fiber, fiberglass, Kevlar) in combination with polymer resins to form a composite product. FRP materials have revolutionized the aerospace, marine, electrical, corrosion-resistance and transportations industries. FRP composites capitalize on their high strength-to-weight ratio and inherent resistance to weather and the corrosive effects of water, salt air and sea water. Founder and Chairman, Ed Fyfe, and his companies have received more than 25 United States patents regarding FRP composites and their applications. More information about Fyfe can be found on its internet site at www.fyfeco.com.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. The Company makes forward-looking statements in this news release that represent the Company’s beliefs or expectations about future events or financial performance. These forward-looking statements are based on information currently available to the Company and on management’s beliefs, assumptions, estimates or projections and are not guarantees of future events or results. When used in this document, the words “anticipate,” “estimate,” “believe,” “plan,” “intend,” “may,” “will” and similar expressions are intended to identify forward-looking statements, but are not the exclusive means of identifying such statements. Such statements are subject to known and unknown risks, uncertainties and assumptions, including those referred to in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on February 28, 2011 and in our subsequent quarterly reports on Form 10-Q. In light of these risks, uncertainties and assumptions, the forward-looking events may not occur. In addition, our actual results may vary materially from those anticipated, estimated, suggested or projected. Except as required by law, we do not assume a duty to update forward-looking statement, whether as a result of new information, future events or otherwise. Investors should, however, review additional disclosures made by the Company from time to time in its periodic filings with the Securities and Exchange Commission. Please use caution and do not place reliance on forward-looking statements. All forward-looking statements made by the Company in this news release are qualified by these cautionary statements.
Insituform® and the Insituform® logo are the registered trademarks of Insituform Technologies, Inc. and its affiliates. Tyfo® and Fibrwrap® are the registered trademarks of Fyfe Group, LLC and its affiliates.
Contacts:
David F. Morris, 636-530-8000
Senior
Vice President and Chief Administrative Officer
