Harsco Corporation (HSC) and Clayton, Dubilier & Rice ("CD&R") recently announced the successful completion of a pending transaction to sell Harsco's Infrastructure division into a joint venture (:JV) between the two companies. Harsco will receive around $300 million in cash and a 29% equity stake in the JV, valued at $225 million.
In September this year, Harsco had announced the above mentioned deal with Clayton, Dubilier & Rice, a private investment firm. The investment firm will also acquire Brand Energy & Infrastructure Services, Inc. from First Reserve .Together, the two acquired businesses will operate as a stand alone company and will retain the name, Brand Energy & Infrastructure Services. The combined company will offer specialized industrial services to the energy and infrastructure sectors.
The energy sector is expected to be the major revenue driver for the new entity, but it is also likely to gather substantial revenues from maintenance work.
Harsco’s Infrastructure segment generated revenues of $243 million in the third quarter of 2013, increasing 6% year over year. Despite improvement in revenues, the segment incurred an adjusted operating loss of $4 million. The sell-off of the business is in line with Harsco’s strategy of simplifying its business profile. Moreover, Harsco’s financial structure will be enhanced, which can be used for its organic growth or for strategic acquisitions
Harsco believes that the new combined $3 billion company will present more growth opportunities. Also, the combined company is expected to operate in a more cost-efficient way.
Headquartered in Pennsylvania, Harsco is a diversified multinational company that serves global infrastructure, metals, minerals, rail and industrial sectors.
Harsco currently has a Zacks Rank #3 (Hold).Better-Ranked industrial services stocks include Hudson Technologies Inc. (HDSN), ScanSource, Inc. (SCSC) and CaesarStone Sdot-Yam Ltd. (CSTE). While Hudson and ScanSource carry a Zacks Rank #2 (Buy), CaesarStone holds a Zacks Rank #1 (Strong Buy).