September 2009 Vol. 236 No. 9

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Quanta Services to Acquire Price Gregory

Quanta Services, Inc. announced Sept. 3 that it has signed a definitive agreement to acquire privately held Price Gregory Services, Incorporated, a leading natural gas and oil transmission pipeline infrastructure service provider, in a cash and stock transaction valued at approximately $350 million.

Price Gregory specializes in the construction of large diameter transmission pipelines. The acquisition of Price Gregory positions Quanta as a leader in the North American energy transmission infrastructure market. Quanta cites a positive outlook on the natural gas market’s future as one of the drivers behind the deal.

“The acquisition of Price Gregory is a strategic move that will significantly expand the scale and scope of Quanta’s existing natural gas operations. We are confident that the additional resources, expertise and client relationships that Price Gregory brings will support our efforts to capture attractive opportunities in the natural gas pipeline infrastructure market, which is projected to grow significantly in the next decade and beyond,” said John R. Colson, chairman and chief executive officer of Quanta. “Financially, this transaction is also very compelling. We expect it to result in substantial EPS accretion, increased revenues and strengthened margins, and to generate significant free cash flow to continue to fund our growth strategy.

“While demand for transmission pipeline construction has recently been impacted by the recession and low natural gas and oil prices, substantial growth is projected over the next decade as domestic natural gas plays a larger role in meeting [the United States’] energy independence and clean energy goals.” Colson also noted that there are more than 50 major pipeline projects approved or underway within the United States.

Prior to the global economic downturn, Price Gregory achieved revenues of more than $1.41 billion and earnings before interest, taxes, depreciation and amortization of $258 million for the year ended Dec. 31, 2008. Price Gregory is expected to achieve revenues between $1.1 billion and $1.2 billion and EBITDA between $170 million and $190 million for the year ended Dec. 31, 2009 and revenues between $700 million and $900 million in 2010. The transaction is expected to be accretive to Quanta’s earnings per share before amortization expenses by $0.13 to $0.21 in 2010.

The transaction, which is subject to customary closing conditions and regulatory approvals, is expected to close in the fourth quarter of 2009.


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