Quanta Services to Acquire Blattner Holding Company

Source: www.gulfoilandgas.com 9/2/2021, Location: North America

- Increases Exposure to Large and Growing Renewable Energy Markets (Wind, Solar and Energy Storage)
- Positions Quanta as an Industry Leader to Collaborate with Customers to Shape the U.S. Energy Transition
- Expected to be Accretive to Quanta's Growth, Margins, Cash Flow Conversion and EPS Without Synergy Assumptions
- Estimated Adjusted EBITDA and Adjusted EPS Contributions of Approximately $250MM - $290MM and $0.80 - $1.00 in 2022
- Enhances Quanta's Already Favorable ESG Profile

Quanta Services, Inc. has entered into a definitive agreement to acquire Blattner Holding Company (Blattner), one of the largest and leading utility-scale renewable energy infrastructure solutions provider in North America. Founded in 1907 and headquartered in Avon, Minnesota, Blattner provides front-end engineering, procurement, project management and construction services to leading renewable energy developers for wind, solar and energy storage projects. Through its geographically and technologically diverse capabilities, Blattner has completed or been awarded more than 300 wind projects (+49 GW installed generating capacity), more than 90 solar projects (+12 GW installed generating capacity) and 17 energy storage projects. Over the last several years, Blattner has achieved double-digit organic revenue and profit growth by leveraging its operational expertise and collaborative customer relationships. Blattner generated full-year 2020 revenues and adjusted EBITDA (a non-GAAP measure) of approximately $2.4 billion and $291 million, respectively.

Duke Austin, Quanta's President and Chief Executive Officer, commented, "We are excited to announce our intention to acquire Blattner and we look forward to welcoming their employees to the Quanta family of companies. Both Blattner and Quanta are rooted in entrepreneurial, family-operated businesses that are focused on safety and care deeply about their employees. We believe what Quanta is to the electric power solutions industry, Blattner is to the utility-scale renewable energy solutions industry. Together, we will be focused on what we believe are the most attractive areas of the electric infrastructure complex. Blattner will bring an exceptional management team that we believe will enhance our ability to collaborate with our customers to shape North America's energy transition to a carbon-neutral economy. Blattner has a strong and visible project backlog, and we believe their financial contribution will be accretive to Quanta's growth, margins, cash flow conversion and earnings per share."

Scott Blattner, President of Blattner Holding Company said, "Our industry is on the cusp of significant evolution and this is an opportunity to add the additional scale and resources needed for our organization to continue leading and delivering certainty to our renewable energy customers. Blattner was looking for a strategic partner with the resources and capabilities that will provide us the opportunity to strengthen our market position, take advantage of next-generation opportunities emerging in the renewable energy market and continue to contribute to the long-term success of our employees and customers. To that end, we believe Quanta is the ideal partner for Blattner."

Blattner's existing management team will remain in place, with Scott Blattner continuing in his leadership role as President. With a skilled, dedicated and high-quality workforce, Blattner will serve as a platform operating unit of Quanta.

Lazard is serving as financial advisor and Latham & Watkins, LLP is serving as legal advisor to Quanta for this transaction. J.P. Morgan Securities LLC is acting as exclusive financial advisor to Blattner.

Acquisition of Blattner is Consistent with Quanta's Key Strategies for Sustainable Success, Compelling Financial Contributions and Strong Cultural Fit
• Leading, Pure-Play Renewable Energy Infrastructure Solutions Platform – Blattner is a leading renewable energy infrastructure solutions provider with an experienced and deep management team that represents a rare scale opportunity in an otherwise fragmented market. Blattner will significantly increase Quanta's exposure to the large and growing utility-scale renewable energy wind, solar and energy storage markets.
• Accelerating Near- and Long-Term Growth Drivers – Renewable energy development is expected to accelerate over the foreseeable future, driven by public and private industry energy transition and carbon-neutrality initiatives; electricity load growth to support increased electrification; including new generation capacity; supportive public policy; declining levelized costs of renewable energy; and consumer and investor preferences.
• Increasing Quanta's Capabilities to Provide Infrastructure Solutions – Quanta is the industry leader in providing comprehensive infrastructure solutions to North American utilities that support their efforts for system modernization, grid hardening, maintenance, and replacement. Current and potential customers have encouraged Quanta to expand its services offerings that provide renewable generation engineering and construction services. To that end, Blattner will provide Quanta with industry-leading capabilities to meet these customer needs – pairing Blattner's renewable energy solutions with Quanta's electric transmission and substation solutions, for a turnkey approach.
• Expect Meaningful Accretion and Financial Contributions Without Synergy Assumptions – Quanta expects Blattner to contribute meaningfully to its financial profile in the near and longer term, including revenue, margins, adjusted EBITDA, free cash flow conversion and earnings per share. For the full year of 2022, Quanta estimates revenues for Blattner to be between $2.5 billion and $2.7 billion, adjusted EBITDA for Blattner to be between $250 million and $290 million and Blattner's contribution (not accretion) to adjusted diluted earnings per share (a non-GAAP measure) to be between $0.80 and $1.00. Management notes that these financial expectations are preliminary and, accordingly, has taken a prudent approach to its forecast.
• Enhances Revenue and Customer Diversity – Like Quanta, Blattner brings deep, longstanding, and collaborative customer relationships, which are additive to Quanta's blue chip customer base. Blattner's strong relationships with the renewable industry's leading developers are expected to continue to drive ongoing and repeat business and diversify Quanta's customer base, while creating new growth opportunities with existing customers.
• Strong Cultural Fit – Similar to many of Quanta's other operating companies that have been managed by multiple generations of family members, Blattner has been owned and operated by the Blattner family since 1907. Also, like Quanta, Blattner has shown a commitment to its employees through comprehensive training and safety programs and by providing a work environment that fosters prosperity and growth.
• Enhances Quanta's Already Favorable ESG Profile – As discussed in Quanta's 2020 Corporate Responsibility Report, Quanta has a favorable ESG profile due to its commitment to People, Planet and Principles. We believe the integral role Blattner plays in facilitating renewable energy generation, as well as its commitment to corporate social responsibility, will complement and enhance Quanta's ESG efforts.

Transaction Consideration and Financing
The transaction consideration of $2.7 billion anticipated to be paid at closing will consist of approximately $2.36 billion in cash, subject to a working capital adjustment, as well as shares of Quanta common stock valued at approximately $340 million. Additionally, pursuant to the terms of the definitive agreement, Blattner owners will be eligible for an earnout payment that could provide additional consideration of up to $300 million, to the extent certain financial performance targets are achieved. Quanta has obtained commitments from Bank of America, N.A. and Wells Fargo, National Association for bridge financing, should it be needed, to complete the transaction. However, the company expects to pursue certain other debt financing alternatives to finance the cash portion of the transaction consideration.

Transaction Approvals and Closing Conditions
The transaction has been unanimously approved by the Board of Directors of both Quanta and Blattner and is expected to close in the fourth quarter of 2021, subject to receiving required regulatory approvals and the satisfaction of other customary closing conditions.


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