Selective M&A Activity in the Construction Space with Smaller Deals Involving Public Companies Buying Smaller Private Companies, According to Expert Analyst Jack Kasprzak

Wall Street Transcript

67 WALL STREET, New York - April 15, 2013 - The Wall Street Transcript has just published its Building Materials, Construction and Housing Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: North American Electrical Transmission, Infrastructure Build in Emerging Markets, Strong End Markets for Building Products, Energy infrastructure companies, Infrastructure spending

Companies include: Owens Corning (OC), Granite Construction Inc. (GVA), Great Lakes Dredge & Dock Corp (GLDD) and many more.

In the following excerpt from the Building Materials, Construction and Housing Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Are we seeing any M&A activity in the space?

Mr. Kasprzak: You are seeing what I would call selective M&A activity in the space. M&A activity hasn't vaporized, but the deals have been smaller and, in general, involved public companies buying smaller private companies. There has not been M&A activity in the sense of larger deals and bids for public companies, or large public companies buying each other, which we saw in previous cycles.

It happened in the 1990s, it happened in 2007, 2008, but typically that happens towards the end of a cycle. It often takes place after things have been pretty good for a while, and the companies have repaired their balance sheets and they are more flushed with cash. Since we are just starting this cycle, it is not unusual that we are not seeing significant M&A activity right now.

TWST: You mentioned pent-up demand. Does it appear that we are going to see increased demand in the housing industry as well as in the commercial construction industry?

Mr. Kasprzak: Absolutely. It certainly looks like the seeds have been planted for significant improvement in new home construction over the next 12 to 24 months. Building permits have been on the rise, housing starts have also been on the rise for the past year, so we are seeing strong indicators of positive movement. You are now starting to see units under construction improve. There was a bit of a lag there, but we are starting to see that number catch up.

In other words, when housing starts started to kick up, we did not immediately see action construction on the ground improving. But as time has gone on, projects have started, and I think that in 2013 and 2014 you should see a noticeable improvement in actual units under construction. You will see more housing construction activity on the ground taking place...

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