Harsco To Sell Infrastructure Unit Into JV With Clayton, Dubilier & Rice

(RTTNews) - Diversified industrial company Harsco Corp. (HSC) announced an agreement to sell Harsco's Infrastructure division into a joint venture with Clayton, Dubilier & Rice or "CD&R" under a transaction that would combine the Infrastructure division with Brand Energy & Infrastructure Services, Inc., which CD&R is simultaneously acquiring from First Reserve

Harsco said that the combined company, which would continue under the name Brand Energy & Infrastructure Services, would be a leading, single-source provider of specialized industrial services to the worldwide energy and infrastructure sectors. Following the transaction closure, Harsco would receive about $300 million of cash proceeds and a 29 percent stake in the combined company, which has an enterprise value of some $2.5 billion.

Pro forma 2013 annual revenues for the combined company are estimated at around $3 billion and EBITDA margin is likely to be in the low double digits. Nearly two-thirds of the combined company's revenues are expected to be generated from the energy sector, with a significant level of recurring revenue driven by required maintenance work. Pursuant to the transaction, Harsco would receive about $300 million cash and an equity stake in the combined company initially valued at $225 million, valuing Harsco's Infrastructure division at $525 million. The enterprise value of the combined company is likely to be nearly $2.5 billion, including $1.7 billion in debt financing.

The transaction, unanimously approved by the Harsco board, may close before this year end.