Summary
Quanta Services, Inc. (PWR) has filed an 8-K report detailing the completion of its acquisition of three Canadian construction companies: Valard Construction (2008) Ltd., Valard Construction Ltd., and Sharp’s Construction Services 2006 Ltd. (collectively, the Valard Targets). The transaction, valued at approximately CAD$225 million less consolidated indebtedness at closing, was structured with a mix of cash and stock consideration, including Quanta common shares and exchangeable shares issued by Quanta's subsidiary Exchangeco. These exchangeable shares are designed to be economically equivalent to Quanta common stock and carry equivalent voting rights through a special voting share, while aiming to mitigate Canadian tax implications for selling shareholders. The acquisition closed on October 25, 2010, and Quanta utilized Regulation S of the Securities Act for the unregistered issuance of securities to non-U.S. persons. The filing also notes an amendment to Quanta's Certificate of Incorporation to authorize a new series of preferred stock (Series F Preferred Stock) to facilitate the voting rights associated with the exchangeable shares. The company has entered into a Support Agreement to ensure holders of exchangeable shares receive equivalent economic and voting benefits to common stockholders. This strategic acquisition is expected to expand Quanta's operational footprint and service offerings in the Canadian market.
Key Highlights
- 1Quanta Services completed the acquisition of Valard Construction (2008) Ltd., Valard Construction Ltd., and Sharp’s Construction Services 2006 Ltd. for an aggregate purchase price of approximately CAD$225 million (less indebtedness at closing).
- 2The transaction involved a combination of cash (57.33%) and stock consideration (42.67%), including Quanta common shares and exchangeable shares issued by a subsidiary (Exchangeco).
- 3Exchangeable shares are designed to be exchangeable on a one-to-one basis for Quanta common stock and carry equivalent voting rights through a Series F Preferred Stock, intended to minimize Canadian tax consequences for sellers.
- 4The acquisition closed on October 25, 2010.
- 5Quanta utilized Regulation S of the Securities Act for the unregistered issuance of securities to non-U.S. persons.
- 6A Support Agreement was entered into to ensure economic and voting parity between holders of exchangeable shares and Quanta common stockholders.
- 7The company amended its Certificate of Incorporation to authorize the Series F Preferred Stock for voting rights linkage with the exchangeable shares.